Milk price has not yet determined its course

The distance between fat and protein prices is slowly starting to increase again. The pressure on protein comes mainly from Brussels, for example because the intervention scheme for it has been canceled this week the purchase of skimmed milk powder was at a fixed price. What the market wants to know, however, is how Brussels will get rid of the more than 350.000 tons of milk powder that is in storage. Postponing the decision increases pressure on the market.

Market on edge
In week 5, ZuivelNL still recorded a price of €136 for skimmed milk powder food, compared to €128 per 100 kilos for feed. However, there is a but. By selling a small volume from intervention, at a price of €119 per 100 kilos, suppliers now also have to deal with buyers who want to do business at such a low price. It puts the market further on edge.

The prices for fat pluses are. The price of butter rises to €417 per 100 kilos. The argument given is more demand from the world market, as a result of less milk in New Zealand.

However, even more important are the developments nearby. So the year started with minimal supplies of butter. Buyers are currently actively trying to hedge against a sudden increase, which is creating more demand. That question is supported by Easter, which falls early this year. Finally, a new contract was signed with Aldi and Lidl and demand has shown an upturn since then. The cream price also benefits from these developments and rises to €4,65 per kilo ex work.

On the production side, low prices for skimmed milk (€0,05), skimmed milk concentrate (€800 per tonne of dry matter) and skimmed milk powder play a role. As a result, the value of the combination of protein and butter is more or less the same as that of cheese and whey. In practice, however, preference appears to be given to cheese and whey and the production of butter is inhibited.

Cheese a bit more positive
The cheese market in Germany is milder. The German cheese price fell to €2,50 to €2,70 per kilo, but the explanation was that spot prices are rising again. The higher prices follow the slowdown in cheese production, resulting in less product available for February. It gave the cheese price the chance to increase to €2,30 per kilo finished work.

All in all, the price for raw milk has no room to increase. In the Netherlands, the price remains at €24 per 100 kilos (delivered at 4,4% fat). Milk in the north of Germany has a price of €20 per 100 kilos (delivered at 3,7% fat) and the south has a price of €21 per 100 kilos.

Spring is approaching and that means the market can still go in any direction. Although the signals indicate that many liters of milk are still arriving (this is how the supply in the Netherlands is described as good), this could still turn out differently. Also a decision from Brussels, with regard to milk powder, the market can still move in any direction.

What is good news in any case is that the world market is growing again and the demand for dairy will therefore only increase. Much or little, every question helps. For now, the market is mainly waiting.The gap between the milk price and the price of free milk is decreasing.