Where should plus on milk price come from?

The good news is that China is still in the market. It looks like the European Union (EU) is nipping at New Zealand's market share. Tuesday's GDT underlines this, because while Chinese demand usually guarantees pluses, prices are now often in the red.

Market cannot cope with supply
In particular, whole milk powder (WMP), which sets the tone on the world market, is having to make a significant decline. On average, the manufacturer records a minus of 5,5% to arrive at $2.852, equivalent to €2.462, per tonne. It is the month that saw the most supply, indicating that the market cannot cope. For example, the price for January delivery fell by 9,4% to reach $2.808 per tonne. The extra demand from China should have yielded a better result. 

A total of 35.072 tonnes could be traded at the auction. Slightly less than the 35.669 tons sold at the previous auction. On average, the price fell by 3,5% to reach $3.105 per tonne. If it is taken into account that the starting prices of the manufactured products (compared to the previous auction) have already decreased a step, the impact of the auction is even greater. 

Can Plus be stored in skimmed milk powder?
A positive standout is skimmed milk powder for delivery in February. A reasonable volume from New Zealand was still offered here and a plus of 6,1% could still be achieved. A temporary revival, because if the EU interferes with this delivery date, the price will inevitably take a step back. In the meantime, the butter price and that in New Zealand have come closer again. 

Euro exchange rate very important
Due to the declines in prices, the exchange rate mainly determines whose turn it is. If the euro beats the dollar, the EU will triumph, otherwise New Zealand will walk away with the loot. This means that competition on the world market is fierce and increases in milk prices must come close or be made possible through sales in other European Member States.

$1 = €0,8631    Butter prices in the Netherlands and New Zealand.