Inside: Dairy Market
Bargain price milk withstood a tough week
Historically, weeks 32 and 33 have been dark red weeks in the raw milk spot market. At least, in 2014. An analysis for subscribers to Milk & Feed shows why the milk price is now able to withstand these weeks with ease.
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The trend in the DCA spot price for raw milk in the Netherlands has been parallel to 2014 since the second quarter. That is the year in which the dairy market collapsed in August, resulting in significant corrections to milk prices.
There, the price trend of mid-August 2017 differs from that of 3 years ago. Then the spot price dropped in 2 weeks by €8,50 to €32 per 100 kilos. This year the milk price at spot level will not shrink. The reason: milk remains popular, thanks to cheese, cream and butter.
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In weeks 32 and 33, the parallel in the price development between 2014 and 2017 was broken.
Milk stable
Raw milk is rarely available in both the Netherlands and Germany. Many dairy processors choose to process the milk themselves into cheese and cream. Now that cream yields almost €8.000 per tonne and cheese is also interesting, this processing is the most rewarding.
Most dairy farmers use the milk supply themselves and this leads to a 'thin' spot market for raw milk. The DCA quotation for raw milk in the Netherlands (delivered at 4,4% fat) is, just like last week, €43,50 per 100 kilos. In Northern Germany, €3,7 is charged (at 41,50% fat, delivered). In southern Germany the price is €0,50 higher.
Block for cream
In recent weeks, the cream price has been on the rise, with the limit of €8.000 per tonne slowly coming into view. However, crossing this border does not happen automatically. At the beginning of the week, cream briefly traded above the €8 per kilo limit. Later sentiment weakened somewhat.
This leads to a DCA room quotation of €7.900 per tonne. There is a little more cream in circulation. The strategy of many dairy farmers is to process as much milk as possible into cream and then turn it into butter. The loss in 'skimmed milk' is then taken as priority. The price of skimmed milk concentrate is fluctuating and falling by €20 to €1.600 per tonne.
Vet continues to support milk prices
The cream price still feels solid for later. Prices are already being made sporadically, in the first quarter of 2018, just under €8.000 per tonne. The 'support' of the price will therefore probably remain intact. The cheese price, on which the milk price also depends, also feels stable. In Germany this week €3.450 to €3.700 was quoted for Gouda 45, with good demand.