Dairy market is certain and uncertain at the same time

Despite the fact that the high temperatures in Northwest Europe are behind us, the spot prices for raw milk are easily maintained. This is partly because the heat in southern Europe is continuing. Italy, for example, is on the market and in need of milk. In the Netherlands, raw milk is traded at the same level as last week. The DCA spot quote for raw milk remains at €40 with 4,4% fat delivered.

There is, however, a thin market, with sometimes deviating prices. Both at the bottom and top. Spot prices also remain the same in northern and southern Germany. In the meantime, milk prices at farm level are improving in the Netherlands. As a result, the milk price reacts, somewhat more slowly, to the better prices for cheese and butter.  

Skimmed milk powder dump product
Skimmed milk powder has more or less become a 'dump product', according to dairy processors. The margins are currently mainly in the butterfat. What is striking is that the price of skimmed milk concentrate is rising, while the price of skimmed milk powder is falling. This means that the raw material has become more expensive than the end product. The reason that skimmed milk concentrate is still rising is due to the limited availability. There are also shortages elsewhere in Europe.

The quotation for skimmed milk concentrate increases from €100 to €1.750 per tonne of finished work. Since the valorisation of milk powder remains a difficult story, the room for growth is probably limited.

Room price is leveling off
The rapidly rising cream price is struggling with buyer resistance this week. At the start of the week, buyers were a bit hesitant, but as the week progressed, the willingness to buy increased slightly. However, there is no room for higher prices. This means that the DCA quotation for cream remains at €7.150 per tonne. On balance, the market is tense, given the record high prices. The scarcity puts the price on a solid plateau, although a slight correction should not be surprised. The butter price also appears to be stabilizing.

Support and uncertainty  
There are uncertainties about the milk supply. The big question is how much impact the weather has had and will have. In Germany, the provisional milk supply in June is 1,5% below the level of last year. Milk supply is also lagging behind in France. This supports the milk price. Especially because the availability of milk will only decrease in the coming months.

Milk supply in the Netherlands will only decrease in the coming months. 

However, there are also uncertainties. For example, about the price of cream and butter in the longer term, while the price of milk powders is currently in a declining trend. The most stable factor is German cheese price (Gouda 45) which rose again this week in Germany by €25 to €3.250 as the bottom.