Countus Dairy Cattle Index shows sharp decline

The Countus Dairy Cattle Index has been showing a sharp decline for a long time. This downward trend is not in line with current milk price developments.

The Dairy Cattle Index was made in collaboration with DCA. For a long time, the Countus Dairy Cattle Index mainly continued to rise, but the tide has now turned and the decline has started. This brings the Index to 156.2 points, a decrease of 36.1 points.

Lower butter and milk powder prices
The main cause of the decline is the lower butter and milk powder prices. Compared to September, the prices of these 2 manufacturers decreased by 5,5% and 6,7% respectively. As a result, the raw material value of milk has fallen below the limit of €40 per 100 kilos. It results in a decline in the Index.

Liquidity planning: especially in good times
A declining return is usually caused by a falling milk price. We are not yet seeing that drop in the milk price. That is strange, so a caveat has to be made. The Index is based on the butter price and the prices of skimmed milk powders. They are already falling.

However, the milk price is not determined solely by these values. The milk is often purchased well in advance by the processing companies. By this we mean well before butter and milk powder prices showed a downward trend.

With 156.2 points, the Index still scores well above the 10-year average. Good liquidity planning is especially important now, partly in view of the introduction of phosphate rights and the tax burden due to the increase in profits.

Prognosis shows a further decline
The forecast shows a further decline. This is mainly based on the futures market for butter. The Global Dairy Trade (GDT) of November 7 showed a further decline in the butter price. This indicates that the world market will no longer support a higher butter price in the longer term.

Despite the fact that the value of milk on paper falls below €40, the payout prices remain high. It still looks like the milk price will not take a step back until January.The Countus Dairy Cattle Index shows a sharp decline.

Over the past few weeks, the Index has fallen by about 30 points.The prognosis is not positive. A further decline will be inevitable.

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