Inside: Dairy Market
GMO-free milk increasingly popular on the spot market
The cream price is struggling with resistance, but is still picking up. Raw milk is scarcely available on the spot market and there is an increasing interest in GMO-free milk. Germany in particular is involved.
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On the spot market, buyers and sellers of raw milk find each other at price levels of €43,50 per 100 kilos (delivered at 4,4% fat). In Germany (delivered at 3,7% fat) the price level is slightly lower. Due to limited availability, there is still a thin market.
GMO-free milk in demand
In Germany, a VLOG standard has been developed for GMO-free milk. This stands for Verband Lebensmittel Ohne Gentechniek. From 2018, the supermarket chains, Lidl and Aldi, want to scale up this milk on German shelves. GMO-free cheese is also popular.
Traders are already seeing an increasing interest in dairy products with a VLOG certificate. The premiums paid on this vary. A few euros more per 100 kilos are paid for (skimmed) milk. Comparatively more is paid for GMO-free cheese.
Cheese price crucial after intervention
After September, when the intervention scheme for skimmed milk powder ends, the dairy market will enter a different phase. The question is which strategy the dairy farmers will choose. If the decision is made more often to sell cream and skimmed milk (concentrate) directly at spot levels, there will be pressure on butter and cream prices. Skimmed milk powder will also come under extra pressure. This scenario is obvious when the price of cheese drops.
With a stable cheese price, a lot of milk will probably continue to flow into the cheese. This means that butter and cream remain in limited supply, which supports the price. A stable cheese price is therefore crucial for the price paid to dairy farmers.
German cheese price
For the time being, the German cheese price, which is at the lower end of €3.450 per tonne, feels very stable. Nevertheless, the price of cheese determines how scarce butter and cream are. Both processors and traders weigh their strategies based on the different scenarios.
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The past shows that the German cheese price, after a stable summer period, can go in any direction.
Cream and skimmed milk concentrate
Cream prices rose slightly this week. It is trading at levels close to €8.000 per tonne. As the week progressed, resistance increased. The room for increase therefore remains unpredictable. Skimmed milk concentrate remains stable at €1.500 per tonne.