Inside: Dairy Market
Raw milk is suddenly scarce
Although milk supply is approaching a peak this month, this is not reflected in the spot market. Milk is even scarce; most dairies process the supply in their own factory.
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The milk processors say that the supply is manageable, despite the fact that volumes are increasing. The cancellation of 1 processing day (due to Ascension Day) does not result in overcrowded factories. In fact, dairy farmers prefer to process the milk themselves. This indicates that the processing is profitable. The situation is no different in Germany, although milk supply there is about 3% above the 2017 level.
The rising fat market is the reason for rising spot prices. A steady undertone in the milk fat is also expected in the coming weeks. With the current butter prices, there is still upward potential in the cream price. It is reflected in the DCA cream price, which this week showed an increase from €250 to €6.700 per tonne (ex factory).
Raw milk attracts
Raw milk is traded across the board in the Netherlands above €30 per 100 kilos. However, there is a thin market this week, because the volumes are simply not there. The DCA quotation increases by €1,25 to €31,50 per 100 kilos (delivered at 4,4% fat). The market has responded surprisingly to the revival; was a few weeks ago the situation namely the other way around.
In addition to the rising fat market, the price of spot milk is currently supported by demand from the fresh segment. This is undoubtedly related to the nice weather of recent days, which has caused an upturn in ice cream consumption. Whether the upward trend can be continued in the coming weeks remains to be seen. The weather is changing; this will probably normalize demand from the fresh segment.
Market with downside
The price of skimmed milk concentrate is the downside of the good fat market. There is a lot of supply throughout Europe. Processors, without drying capacity, settle for low prices for concentrate and skimmed milk. The powder producers can therefore draw from a wide range. Yet the price of skimmed milk powder is rising; This is due to good sales opportunities on the world market. In line with this, the DCA quotation for skimmed milk concentrate also increases by €50 to €680 per tonne (ex factory).
| DCA spot price milk | Price range (week 19) | Number of problems | Average |
| €31,55 (+€1,25) | € 30,00 - € 33,00 | 6 | €31,50 |
| Explanation DCA Markets: Due to scarcity, the price of raw milk is increasing; both in the Netherlands and Germany. How sustainable prices are at these levels will become clear in the coming weeks. There is a searching market in Europe. | |||
| DCA Room | Price range (week 19) | Number of assignments 6 | Average |
| €6,700 per tonne (+€250) | € 6.600 - € 6.750 | 6 | €6.700 |
| Explanation DCA Markets: The fat market continues to improve and there is still room for rising prices in cream. The market is more likely to shift upwards than downwards in the coming weeks. How much upside potential there is remains to be seen. The market is slightly nervous at these high levels. | |||
| DCA skimmed milk concentrate | Price range (week 19) | Number of problems | Average |
| €680 per tonne (+€50) | € 600,00 - € 700,00 | 6 | €680 |
| Explanation DCA Markets: Although the price range is the same as last week, the quotation increases this week. This is due to the higher prices achieved in skimmed milk powder. On balance there is a wide range; the processing capacity leaves much to be desired here and there. | |||