Tropical weather makes spot market lively

The tropical temperatures in the Netherlands, but also elsewhere in Europe, have a price-increasing effect on the spot market for raw milk. Processors report a declining milk supply that was not expected in advance. Temperatures between 27 and 30 degrees Celsius are unusual for June. Given the many hot days this month, less milk is expected than in other years.

Declining levels
It makes the spot market for raw milk lively. Compared to last week, the DCA spot quotation for raw milk increases by €2 to €40 per 100 kilos, at 4,4% fat. In the north of Germany, the price rises by €2 to €38,50 per 100 kilos, at 3,7% fat. In the south of Germany, the price is €1,50 higher to €39 per 100 kilos, at 3,7% fat. 

The reason for the significant increase also has to do with the declining fat content in milk. A few weeks ago the fat content in the milk was approximately 4,4% per liter of milk. Due to the warm temperatures, this has dropped here and there to 4,2% fat per liter of milk. In percentage terms, this is a small decrease, but this is clearly noticeable in processing. The declining fat contents, in combination with the rising price of cream, means that the milk price is rising. Moreover, an expected lower milk yield is included in the milk price. 

Cream further up
Processors who normally sell cream are running short these weeks. Few suppliers with many buyers means that the cream market exceeds €7.000 per tonne. The DCA cream price increases by €400 to €7.150 per tonne. The price of 'white gold' therefore continues to rise, based on seasonal good demand and little supply. However, it is heard from the market that such prices are accompanied by a lot of resistance.

Butter is also constantly increasing. At spot levels there is cautious flirting with €6.000 per tonne. Occasionally, even lots are traded above this limit. Processors with shortages must purchase to meet delivery obligations. Selling parties have a seat and take advantage of this market situation. The top of the market shifts by €150 per tonne every week. The declining milk supply is likely to weaken resistance in the market.

German cheese price   
The cheese price in Germany remained at €3.225 per tonne this week. Processors have managed to conclude higher contracts for July. This increases the chance of a higher milk price. The ripening stocks in process are low, so a higher cheese price is within reach. The cheese price usually rises in the second half of the year.

The development of the German cheese price in 2017, compared to 2013 and the 5-year average. 

Skimmed milk concentrate is firmer
The price of skimmed milk concentrate increases by €100 to €1.650 per tonne. There is a more fixed price as a result of less milk. There is little or no room to rise further. This is due to the falling prices for milk powders. There are reports that Brussels has sold skimmed milk powder from intervention stock at price levels of €1.850 per tonne. This explains the negative trend of milk powder on the world market.