Inside: Milk & Food
Milk market flourishes thanks to approaching Easter
In more and more places the cows go out into the pasture. This also gives a starting signal for the increase in milk supply. The question now is whether the Netherlands will participate in this or whether it will not get any further than a minimal increase this year. Meanwhile, Easter is boosting the demand for dairy. More in an analysis of Boerenbusiness Milk.
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It is mainly the cheese prices that catch the eye in the last week of March. Starting with the German stock exchange. A week earlier, the price went up to 3 to 3,20 euros per kg of cheese. In week 13 this dropped again to 2,95 to 3,20 euros per kg. This is despite the fact that demand is described as good and there is talk of lower inventories.
2,85
euro
Cheese prices on the spot market up
While the stock exchange is trading lower, day trading is actually recording higher prices for Gouda and Edammer. The lower end of the price increases from 2,65 euros to 2,85 euros per kg. The price increase is due to the fact that there is a hard search for cheese that has not yet been sold before April. The delivered cheese is also described as young, or 6 to 7 weeks old. That is also a sign that there is not too much stock available.
Has the bottom been found in the market?
It is still difficult to say whether the bottom has been found in the market. A lot will depend on the milk supply. In the Netherlands this could turn out to be an unexpected asset. For example, supply usually starts to increase around this time, but most parties currently indicate that they are not yet seeing that increase.
More cows in the meadow could change that. This does not alter the fact that, in the last few weeks and in the coming weeks, many cows will disappear from the Netherlands through export and slaughter.
In addition, the highest slaughter figure since 12 was recorded in week 2008. With 18.541 slaughters, the Netherlands sets a temporary record. The lead compared to a year earlier is 45 percent or 61.126 animals. In total, more than 8 million kilograms of phosphate disappeared from the Netherlands.
Milk production in the United Kingdom is increasing
While the increase in the Netherlands is somewhat lacking, the United Kingdom is writing more milk again. This is the first time that a significant increase has been achieved. In Germany, milk supply is following the 2015 trend. In France, the gap fell to 1,9 percent. The milk supply reaches its highest point around week 14. There is some speculation about the duration of the flush, but given the revenues in recent years, an extended peak does not seem realistic.
In Ireland, milk production is slowly but surely starting to increase and they are leaving winter behind them. The Irish mainly influence the price of cheddar. This is estimated at 3,05 to 3,10 euros per kg. If more milk comes into Ireland, this could create more pressure.
438
euro
Easter booster for the question
Like every year, the Easter argument sounds again as the biggest driver of demand. This time this also applies to cheese. However, the argument is even more clearly visible in the cream and butter. The Dutch butter price rose to 438 euros per 100 kg. That price compares to a German price of 4,30 to 4,40 euros per kg. The supply is tight. What further supports this tight supply is the relatively high price of cream, which discourages the making of butter.
After a number of weeks of strong increases, the price of cream reached the upper end of March. A week earlier, a price of 5,20 euros per kg was enthusiastically quoted. At the end of March, prices range from 5,15 to 5,20 euros per kg.
Even though cheese and butter are doing better, there was a write-down in the price of whole milk powder. In the Netherlands it went back to 262 euros per 100 kg. The price in Germany is 2.750 to 2.850 euros per tonne. The price pressure is mainly the result of low demand.
366
ton
Price drop in lower milk powder has come to a halt
The price drop in skimmed milk powder in the Netherlands has come to a standstill at 170 euros per 100 kg. In Germany the price fell further to 1.670 to 1.790 euros per tonne for consumption. Due to the exchange rate of the euro and more supply from the US, competition on the export market is increasing.
Preparations are being made to place product in intervention if necessary. On March 21, 336 tons were offered from intervention via a tender. The bids amounted to 140 to 166,87 euros per 100 kg. No bids were accepted.
Whey for consumption in Germany remains at 1.070 euros per tonne. Livestock feed is worth 870 euros per tonne in Germany. In the Netherlands the price went back a step further. The price was 85 euros per 100 kg.
The developments in skimmed milk powder put the price of skimmed milk concentrate at 1.325 euros per tonne of dry matter ex-factory. The Dutch spot market remains thin in size. At 4,4 percent fat, it yields a price of 32,50 euros per 100 kg of milk. In the north of the country the price is 30 euros. At 3,7 percent fat delivered, this is a price of 30,50 euros per 100 kg of milk. Prices remain under pressure in Italy.
Forecast third and fourth quarter
All in all, the dairy market remains a supply market. On top of that, New Zealand recorded a higher milk supply again in February. Milk receipts there amounted to 1,9 million tons, but that is slightly less than a year earlier.
The reports about grass growth indicate more supply, also in the near future. Good news was the result of the Global Dairy Trade (GDT). The slaughters show a deficit of 20 percent and that also indicates more milk.
Add to that the expectations from the US and it will be exciting to see how the second quarter will develop. If the European Union records a high peak, this could give the market a bad turn. If supply lags behind, this provides a comfortable basis for higher prices towards the third and fourth quarters.
