Trump, massacres and hope for milk price

In Germany, the United Kingdom and France, the gap in milk supply remains between 4 and 4,5 percent. As far as supply is concerned, we have to wait and see whether the cold is really out of the air or whether winter will take hold for a while. For now, processors can use the milk themselves and sell the products properly.

In the Netherlands, the trade in raw milk has declined so much that only an indication is being issued this week. This amounts to 34 euros per 100 kg of milk, delivered at 4,4 percent fat. More action is taking place in Germany. In the north, the price at 3,7 percent fat is 32 euros per 100 kg of milk, compared to 32,50 euros per 100 kg of milk in the south of the country.

Where the raw milk trade is quiet, the demand for cream results in a higher price. The price for cream is 4,65 euros per kg ex-factory for cream.

In the Netherlands, the butter price rose by 5 euros to 405 euros per 100 kg, while in Germany the price is 4 to 4,20 euros per kg. The German listing spoke of good demand, but in the Netherlands the market is mainly described as calm.

This peace of mind from buyers also causes problems in the cheese and powder market. For example, foil cheese moves around 2,70 euros per kg. As far as can be determined, the size of the stocks is not too bad, but there is speculation about more milk and therefore a higher supply. Skimmed milk powder in the Netherlands dropped to 192 euros per 100 kg for consumption, against 179 euros for animal feed. In Germany, consumption costs 1.870 to 2.000 euros, compared to 1.800 to 1.840 for animal feed.

A small indication that less cheese is indeed being made is the whey. For animal feed at 850 euros, for food at 1.050 euros per tonne. An increase compared to a week earlier.

In the EU, sentiment is mixed. The mood in sales to consumers appears to be better, with a weaker undertone when it comes to the major commodities. Outside the EU, Australia is also experiencing the effect of the large herds of cows that were sent to slaughter. The margin there is therefore narrow to negative. Many dairy farmers are therefore faced with the challenge of rebuilding reserves. Dairy Australia therefore estimates 2016 to 17 percent less milk for the 6/8 season.

In New Zealand, the magnitude of the declines is actually decreasing. January yielded 2,41 million tons of milk. A minus of 0,7 percent compared to a year earlier. The deficit compared to a season earlier therefore amounts to a minus of 2,6 percent. The last time less milk was delivered in January was in 2013.

However, the EU cannot easily make up for the gap. December records 12,1 million tons of milk. A slightly smaller decline than anticipated, namely 3,2 percent less than a year earlier. The decline for January is also estimated to be slightly lower than expected, because the Netherlands still recorded a plus. The final score for 2016 was a plus of 0,4 percent or 152,18 million tons of milk.

Which means that there is still a lot of milk available worldwide. Donald Trump is asserting himself in the export field. The fear of less contact with court patron Mexico is starting to come true. For example, the United States Department of Agriculture (USDA) reports that Mexico is looking for alternative suppliers. An opportunity for the EU, which recently sold 15.000 tons of milk powder to Mexico. On the other side of the US, Canada is creating some space through CETA. Experts previously indicated that the deal could be beneficial for cheese sales.              

It will be exciting for a while, but as long as no additional liters of milk are added in the EU, the market will have room to recover. If those liters do arrive, it will fuel the poor sentiment of the last 1,5 months and it will be exciting until the peak in milk supply. After all, it should not be forgotten that there is still a remnant from last season in the stores, in the form of milk powder. This also has to be removed from the market before structural recovery is possible.