Inside: Dairy Market
Milk price of 40 euros turns out to be unsustainable
The indicative milk price for October failed to maintain the level of €40. Although the price has taken a step down, the situation is not that bad yet.
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The indicative milk price (ex-farm), compiled by the German Nutrition Economic Institute (IFE), falls back to €0,393 per kilo (at 4% fat) in October. It is a minus of €0,028 compared to a month earlier. This is a break in the trend, because the decline will put an end to a short period of milk prices above €40 per 100 kilos.
39,30
euro
Keep milk price high
It is not to be expected that the dairy farmers will find the slightly lower price on the milk bill. This is because processors try to keep the members and, in that context, want to keep the milk price high. However, a correction should be made on the basis of butter and skimmed milk powder.
In October, the valuation for protein dropped to € 0,109 per kilo. The lowest level in 1 year. Based on the futures market, this could be the downside, but a lot depends on what Brussels will do with the skimmed milk powder in intervention. If it is sold at lower prices, the market will take another step down.
Butter price scrambles up
The butter price shows better results. A temporary bottom was found there and prices are climbing again. The IFE sets the indicative price for fat at €0,298 per kilo. Just below the September record.
For the months of November and December, the price still has the potential to pick up again. This is because the price of butter is rising again.
The butter price has bottomed out.