Wider milk supply gives dairy market a knock

The mood on the spot market for raw milk is different than in the weeks before. There is more to see. An incident also occurred in the form of a malfunction at a dairy. The general trend is that factories still prefer to process the milk supply themselves, but the prices at spot level are losing.

In the Netherlands, raw milk is €2 lower, at €41,50 per 100 kilos (supplied with 4,4% fat). In Northern Germany the price is €40 per 100 kilos of milk (supplied with 3,7% fat). In the south of Germany the price is €0,50 higher.

Wider milk supply
The reason for the price decline is partly due to a wider milk supply. In the first weeks of September, the milk supply in Germany was more than 2% ahead of last year. There is also more milk in circulation in France, with an increase of 1,4% compared to 2016. The Dutch dairy processors also speak of a slight plus. In addition, there is also more milk in Eastern Europe and Ireland.

The cause is sought in the weather. The dry and warm September weather of 2016 did not last this year. However, to attribute the increased milk supply entirely to the weather would be naive. Naturally, the high milk price plays a stimulating role. This is how the idea lives in the market.

Uncertain butter price
The reason for the lower spot prices is partly due to the uncertainty in butter. The price of butter is struggling to break the limit of €7.000 per tonne and there is uncertainty about which direction the butter price will take.

This also has repercussions for the cream price, which took a hit this week and dropped to € 7.850 per tonne. The uncertainty in butter is fueled by the fact that milk fat from Eastern Europe is increasingly being transported to the west. Buyers are waiting for the wider range.

Cheese price fraction lower 
The same purport applies to the cheese market. Indicative of the changed mood is the German cheese price (Gouda 45), which fell at the top this week (by €0,05) to €3,65 per kilo. There is no drastic change in mood, but the undertone of the market feels different, according to a number of parties.

For a long time, sellers speculated on a rising market, but the opposite now seems to be happening. The result is that the bargaining position of the buying parties is improving somewhat.