Inside: Dairy Market
Germany's milk supply put to the test
Slowly but surely, the German milk supply is recovering after a short but intense period of cold and snow. The bankruptcy of BMG, a German milk trader, has now been added. What does it mean for the German milk lake? What does it do for the Netherlands?
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The lead in German milk supply drops to 9% in week 0,8 (the last week of February). This was the result of a short period of extreme cold. In France the plus disappeared and supply fell 0,2% below last year's line. In France it still yields an increase of 2,12% for February, against an increase of 1,27% in Germany.
2 scenario's possible
Asked about 1 week later the German BMG bankruptcy On. This has had consequences for the market. For example, skimmed milk concentrate was given the opportunity to rise to €950 per tonne of dry matter ex works and cream increased to €5,75 per kilo ex works. There are now 2 possible scenarios.
Scenario 1 is that the price will take a step back next week, when the products have found their way back on the market. Scenario 2 is that Easter production continues to support prices until week 13. Then an exciting period begins.
This is underlined by the cheese market. After a rapid rise, calm returned. The price for foil is currently on average €2,90 per kilo ex work. A single, small batch sells for a higher price.
Consequences of bankruptcy
It will be exciting to see how the price will develop in April. The expectations of extra milk make buyers cautious. Now the bankruptcy of BMG has been added. It is estimated that 800 to 900 dairy farmers, most of them German and a few Belgian, will have to look for a new buyer. This can become a challenge due to the pluses in the milk supply.
This amounts to approximately 2% of the German milk pool. There is already talk of milk going into the fermenter. The question, however, is how many dairy farmers manage to switch to another processor.
Milk production
Then the question arises as to what this has done to milk production. Although the bankruptcy has disrupted logistics in the market, it gives processors the opportunity to create room for maneuver. The downside is that it will probably be at the expense of some dairy farmers. It creates an opportunity for the Netherlands. This is when the pressure of the extra free liters of milk has disappeared. Especially when the milk supply in Germany (due to setbacks among dairy farmers) turns out to be lower.