Difficult plus in price for free milk

Average writing Arla, FrieslandCampina and DMK for February a milk price of €32,74 per 100 kilos (for 600.000 kilos of milk, with 4,41% fat and 3,47% protein). It is a decrease of almost 7,5%, compared to 1 month earlier. It also means that the milk price has fallen back to the level of March 2 in 2017 months.

Free milk slightly more expensive
The milk prices for February explain the shrinking gap between the milk price and the price for free milk. Although it could also take a cautious step up on February 8. This causes the price to rise Dutch free milk (at 4,4% fat) to €25 per kilo. A difficult plus, which can be attributed to the increases in fat. A few players in the market indicate that processors are starting to hold onto the milk.

The harsh reality, however, is that the realistic value of milk is between €24 and €26. The fact that the valorization is not lower can be attributed to the increasing price for cream. This will increase in week 6 to €4,80 per kilo ex factory, an increase of €0,15 per kilo. This brings the price back to the level of early December.

What is causing the cream price to rise remains a matter of guesswork. Various experts indicate that it is still too early for Easter. However, it is pointed out that there is more demand as a result of the lower prices of Aldi and Lidl. Another explanation is the rising butter price.

Concerns about protein
Not only is the butter price increasing, but sentiment in whole milk powder (WMP) has also improved. The latter product receives support from the Global Dairy Trade (GDT). That this is not entirely the case skimmed milk powder (SMP) applies, is due to the stocks in intervention. Skimmed milk concentrate underlines this with a price that drops to €775 per tonne of dry matter ex-factory. Concerns about the price of skimmed milk are greater.

Now that WMP and butter are recording higher prices again, the prospects for cheese are also improving. This can take the pressure off the cheese container. In any case, the Germans are reporting rising prices for foil cheese. At odds with this are the reductions to €2.450 to €2.600 per tonne on the German stock exchange. Inventories for February are described as low. If this can be maintained in March, the prospects will gradually improve during the peak of milk supply.  

Preventing a free fall in milk prices
Fat has become the driving force behind the milk price, but in 2017 it was unable to fully translate the high prices into an outlier in the milk price. The fact that the milk price turned out to be higher in the fourth quarter was mainly attributed to an attempt to retain dairy farmers. Now that fat prices are rising again, there is increasing hope that milk prices will not have to be reduced as much as the daily market dictates.Butter is becoming more expensive again, but protein remains in the red.The difference between the daily price for milk and the payment price is decreasing.