Milk price put to the test in March

The winter weather resulted in higher prices on the spot market for raw milk in week 9. A spoilsport was cream, which actually recorded a lower price. This week, cream quotes €5,35 per kilo of work. Compared to the previous week, this is a decrease of €0,30 per kilo of work.

Peak in milk supply is approaching
The month of February has disappeared from the butter futures market. The price for March starts again with a 4. Yet it is still a positive difference of 17%, compared to the month of January. This while the peak of milk supply is only about 7 weeks away, an unusual development.

Order butter notes The Netherlands in week 10 still €480 per 100 kilos. This despite a decrease of €5 per 100 kilos. In Germany the price dropped to €4,80 to €5 per kilo. The mood is wait-and-see, but that does not alter the fact that the butter price in Germany made the news again. It is said that it is expensive.

With Easter in sight, it is not yet certain this price drop perseverance. Although a week 10 with a lower room quotation is not promising, the Germans do see more demand. There are other factors that are important, such as growing demand worldwide. This is particularly supported by the significantly higher imports by China in January (+50% compared to 2017). 

Foundation laid in the market
Butter prices are dropping somewhat, but the prices have laid a good foundation for the peak in milk supply. This is usually reached around week 17. Cheese has taken over and is rising in Germany to €2,55 to €2,75 per kilo. The foil for Gouda and Edam in Germany mentions a price of €3 per kilo.

Judging from the space that processors have to make cheese, there are few concerns in Germany for the coming month. In the Netherlands there is also talk of lively trade and healthy stocks. However, there was no room for a higher price in natural cheese. As a result of developments in cheese and butter, the price of whole milk powder can also maintain itself.

In spite of the current positive market The month of March is still seen as an important benchmark. If stocks remain within limits, the market can maintain a healthy undertone. If stocks increase, the balance will turn the other way and a further write-down of the milk price cannot be prevented.

Skimmed milk powder is difficult
The skimmed milk powder market remains more difficult. For example, the Global Dairy Trade once again revealed a growing gap between prices in the EU and New Zealand. In the last auction, Arla was about $300 per tonne cheaper, yet the New Zealand product (much more expensive) is still finding its way onto the market.

In addition, skimmed milk powder from intervention was sold for prices between €110 and €127,05 per 100 kilos. The Germans indicate that it does not hinder prices on the daily market. However, a point of concern remains the volumes sold in the latest tenders. This indicates that it will take a long time before the stocks disappear. Skimmed milk concentrate is a reflection of this. The price drops to €730 per tonne of dry matter ex-factory (Netherlands and Germany). In France the price is slightly lower.

The raw milk market continues to reflect the uncertainty of the market. For example, the price for spot milk rose in week 9 to €28,50 per 100 kilos of milk delivered (delivered at 4,4% fat for KKM milk). The price in week 10 amounts to €28,25 per 100 kilos. In the north of Germany the price rises to €28,25 per 100 kilos, compared to a price of €27,50 per 100 kilos in the south of Germany (delivered at 3,7% fat).

Prognosis
Under the influence of growing worldwide demand and the strong increase in butter prices, the milk price has a better bottom than in January. However, the market is still faced with the prospect of extra liters of milk. In addition, the market has to deal with a number of political tensions, which means that it can be said that the market has reopened is put to the test. Bottom line, the market can still go in any direction and the trend has not yet been determined.Butter prices fell both in the Netherlands and on the Global Dairy Trade (GDT).

FrieslandCampina follows the trend in the butter price.