End of Easter question reveals support for milk price

The end of March is already in sight. So far this has not yielded the expected extra liters. Milk production in the Netherlands recovered in week 12, after a dip due to the cold. More free milk is seen in Belgium, but in Germany the supply does not yet live up to expectations.

German supply is disappointing
The milk supply still has almost 6 weeks to go before reaching its peak. This means that there is still plenty of time to increase milk production. Germany kicked off 2018 with a strong plus, but supply is currently lagging behind expectations. It remains to be seen whether this will remain the case. That has two meanings: dairy farmers cannot cope with this the milk prices, or the weather plays a role. If the weather turns out to be the cause, supply can still resume.

Outside the European Union (EU), New Zealand presented 2,2% less milk for February, compared to 1 year earlier. This is less than in 2016 and 2017, but above the volume of 2015. In the United States (US), milk production shows a stable increase of 1,8%. Market experts indicate that the weekly number of slaughters is increasing.

EU takes the lead in milk supply
It is now the EU's turn when it comes to milk supply. With reasonable prices and sufficient feed, this cannot be the deciding factor on the playing field. In the daily market for raw milk, prices still appear to be far below the payment price. For example, the DCA spot quotation for raw milk drops to €27,50 per 100 kilos (at 4,4% fat). 

The price in Germany continues to fall. There, the price in both the north and the south drops to €23,25 per 100 kilos (at 3,7% fat). It looks like pre-sorting is already taking place at the lower processing capacity during Easter. The effect of is also rarefied the bankruptcy of BMG still after.

Volatile butter
The lower prices also follow the trends in cream and skimmed milk concentrate; both manufacturers are declining somewhat. Cream amounts to €5,35 per kilo ex work and skimmed milk concentrate goes to €800 per tonne of dry matter. This means that the effect of BMG has disappeared and the products have again become a reflection of butter and milk powder. For example, the price of butter is unusually high (for this time of year), despite the fact that the price is very volatile. The price is approximately €4.700 to €4.800 per tonne. 

The skimmed milk powder market is awaiting the outcome of the tender from the EU. The product is getting older and therefore prices have to be lowered. In addition, fresh skimmed milk powder has lost almost €1 per ton compared to 150 month earlier. Sentiment is still poor, which means that the fundamentals of this market indicate that prices will continue to fall.

The market for cheese and whole milk powder is more positive. Cheese is estimated at a price of €2,65 per kilo ex work. In Germany the market looks slightly tighter. On the German stock exchange the price could rise to €2,60 to €2,80 per kilo. Supplies are described as limited.

milk prices
We have to wait for April's milk prices and the reaction of dairy farmers to that price. Given the volatile undertone in the fat and the pressure on protein, a stable milk price is very likely. This does not respond to the revival in fat, but the dairy farmer is also spared the pressure from protein.