Inside Milk
ING signals new trend in milk price
Milk prices will pick up again in June, ING provides in its latest outlook for the agricultural sector. The outlook for the remainder of 2018 is also mostly positive, but the bank will signal a new trend from October. Is expensive winter milk a thing of the past?
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The milk price started 2018 with a decline. Despite this decline, the milk price remains above the average from 2011 to 2016. The month of June heralds a trend break and yields a higher milk price. For 2018, the bank predicts a milk price that will be 3% lower, compared to 2017. This is because the peaks of 2017 will not be achieved.
Trend break from October
Another thing that stands out in the ING forecast is the trend break from October. In the past, with the exception of a few exceptional years, winter milk was always the most expensive milk. The abolition of a winter surcharge (at various processors) already gave a signal that management of this was becoming less important, but the trend now clearly shows that the expectations for the fourth quarter are less good and compete with the prices of the third quarter.
In 2017, the prices of various products unexpectedly fell sharply in the fourth quarter, but processors barely adjusted the milk price at that time. At DMK this was partly due to the desire to bind members. This year, the processor must prove itself again in order to prevent further outflow. although it bankruptcy of BMG the pressure may have been relieved somewhat.
Important message
Among other FrieslandCampina explained in an explanation of the annual figures that the imbalance between the milk price and the valorization of milk has cost money. If ING is right, 2018 will be a repeat of 2017. However, this time the processors will make reductions. It is an important message for the Dutch dairy farmer, who must take stock of the phosphate rights in the fourth quarter.
The bank, which represents only a small portion of dairy farmers, indicates the milk price outlook for the agricultural sector, but at the same time reports that a reduction in livestock numbers is not desirable. This shrinkage is said to be related to the climate issue. The bank states that moving livestock farming abroad is not the solution. Innovations in the field of feed efficiency are here to stay grassland and ration solutions for cows offer more opportunities.
According to ING, the month of October will show a decline.