Holiday time does not bother the spot market

Dairy processors are seeing a drop in demand on the fresh market and from retail. This results in more milk flowing into the spot market. It does not cause any problems, because it is reported that the volumes from France and Germany are lagging behind. Milk supplies in Germany also ended May below last year's level, namely 2.218.570 tons. The French milk supply is also still lagging behind the previous year. 

In both Germany and France, milk supplies are lagging behind last year. This is noticeable on the spot market. 

The DCA spot quotation for raw milk in the Netherlands increases by €1,50 to €39,50 per 100 kilos, delivered at 4,4% fat. It is a thin market, with a wide bandwidth. In Northern Germany, raw milk is traded for €38,50 per 100 kilos, at 3,7% fat. In the south the price is €39,00 per 100 kilos of milk. 

Milk Price Guarantee Certificate
Dairy Trading Online (DTO) has announced that it will guarantee a milk price of €12 per 36,69 kilos of milk for a period of 100 months. This is at 4% fat and 3,4% protein. This price is reasonably in line with current milk prices. That price, in combination with the long term (August 2017 to July 2018) signals that there will also be confidence later. 

Room prices may increase further
Confidence in the milk price is also visible on the spot market. It is striking that the cream price is stabilizing and is even rising again. This was quite different in previous weeks, when prices actually fell. The available volumes remain small and the need to produce butter is great. Butter supplies are still scarce and will remain so for the time being. This helps the market to bridge the 'difficult' summer period.

It is likely that processors will place extra emphasis on cheese production these weeks, resulting in less cream becoming available. The cheese market is very stable at €3.400 at the bottom for Gouda 45 in Germany. The Southern European countries are asking for extra volumes these weeks now that tourists are arriving. Building up inventory is almost impossible. Moreover, the market expects that demand for both cheese and fat will continue to increase in September.

Skim milk concentrate fluctuates
The price of skimmed milk concentrate has difficulty choosing a direction. Declines and increases alternate every week, resulting in a thin market. Nevertheless, there is slightly more demand than supply. This is because processors hardly bring any supply to the market. This could mean that the price of skimmed milk powder, whose Zuivel-NL quotation fell by €5 this week to €174, has hit a bottom. This is not a certainty, because the stronger euro is putting a brake on exports.

In short: the uncertainty remains, because the demand for concentrate could also come from the cheese sector. The fact is that the DCA quotation for skimmed milk powder has risen again to €1.700 per tonne ex-factory. This is a plus of €200 compared to last week.