Sailing close to the wind on a capricious dairy market

Spring is only now taking hold, even though temperatures are still below average in various places, especially at night. Name the Netherlands and the south of Germany. Especially in the latter region, it looks like this will result in less milk. The developments in the United Kingdom (UK) and France are at odds with this. More milk weighs heavily on the protein there.

Gap between protein and fat prices is growing
Skimmed milk concentrate in particular is suffering in the UK and France. An average price of 1.250 euros per tonne of dry matter ex-factory is still set for the Netherlands and Germany. France and the UK offer around 1.000 to 1.050 euros per tonne.

A major problem is the lack of demand. Following on from this is the very quiet market for skimmed milk powder. The price remained stable in both Germany and the Netherlands. In the Netherlands the price is 171 euros per 100 kg and in Germany it is 1.670 to 1.770 euros per tonne. In Germany, the Easter holidays are given as a reason for rest.

In week 15, batches were again presented for intervention. For example, Germany offered 576 tons, Lithuania 540 tons and the Netherlands 352 tons. It puts the total at 2.669 tons. So far, no milk powder from intervention has been sold in 2017. It remains to be seen whether anything could be sold from the last 22.000 tons. The chances of that happening are small. On the world market, the EU also faces America, which can compete well in terms of price.

Room prices show the trend
The weakness in protein bypasses fat. For example, mention the cream price. This increased again during the week. It was only during Thursday that there was some more price pressure, as a result of a greater supply. On average, the cream price is 5,22 euros per kg ex work. That is a plus of 0,07 euros per kg. Many countries in the European Union have a day off on May 1, while the Netherlands celebrates King's Day on May 27. It produces broken weeks and that can explain the price pressure.

Following the example of cream, butter prices are also rising. For example, the Netherlands is once again recording 448 euros per 100 kilos of butter. In contrast, prices range from 4.400 to 4.450 euros per tonne in Germany. Compared to prices in the US and New Zealand, the EU is not the most expensive. This means that the butter market remains fixed.

Buyers have to get used to higher prices
Cheese has been the difficult product until now, but this week the mood is starting to change. Market players indicate that it is mainly quiet in Gouda and Edam, but this is partly because buyers have to get used to the rising prices. It helps that there is little stock in Germany and it also looks like stocks are not ample in the Netherlands. Despite the fact that cheese and whey have been representing the highest margins for weeks. Cautiously, higher prices appear and the market takes on a price-containing undertone. 

For Gouda and Edam the price range is 2,85 to 2,95 euros per kilo. The German stock exchange quotes 2.950 to 3.200 euros per tonne. There is more music in the sale of mozzarella. That price is increasing further than that of Gouda and amounts to 3,10 to 3,20 euros per kg. Which also beats the cheddar. The milk supply from Ireland is steadily increasing, but this has not yet resulted in pressure on the cheddar price. This moves above 3 euros per kg. 

Opportunities increase
As icing on the cake, there is also more action being seen in the whole milk powder market. In the Netherlands, this rises to 264 euros per 100 kg, while Germany quotes 2.700 to 2.800 euros per tonne. All in all, it provides a good picture for fat, but for example in butter this cannot be achieved if the protein goes to skimmed milk powder. It indicates that the market also has a major weakness. If you can avoid this, the prospects are not bad. It provides a prospect of stable to higher milk prices when there is room to compensate for the lower performance in protein.       

Meanwhile, higher milk supply figures are being reported in more and more places in the Netherlands. Yet the raw milk trade remains quite tame. It means that processors have more than enough of their own milk, that the margin on manufactured products is too small or that there is nothing to stimulate more production. The broken weeks don't help here either. As a result, with an increased spread, the Dutch price remains at 31 euros per 100 kg of milk, delivered at 4,4 percent fat. The north of Germany pays 29 euros and the south pays 30 euros per 100 kg of mek. This is delivered at 3,7 percent fat.  

The question remains when the peak of milk supply will occur in Germany and the Netherlands and what impact this will have on the market. In February, the EU collected 1 percent less milk, taking into account the leap year. March seems to be moving in line with that. In April, the backlogs in Germany and France will decrease somewhat, but there are no positive signs yet. This means that the supply does not immediately provide room for higher prices, but the demand for dairy is high enough to absorb this. There appears to be no further pressure on prices for April and May could deliver another surprise if the peak is disappointing.  

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