Analysis Countus Dairy Cattle Index
Rising feed prices apply
Feed prices started an upward trend during the summer months. This means that feed prices are at their highest point in years and that has consequences for the returns in dairy farming. Whether this is compensated by a high milk price remains to be seen, according to the Countus Dairy Cattle Index.
The Countus Dairy Cattle Index shows a stable picture in week 34, but the line is well below that of last year. The fact that losses in the yard are limited is due to the butter price† That is almost €1.500 below the record of September 2017 out, but is still among the highest in years at just over €5.300 per tonne. The rising prices for skimmed milk powder cannot compensate for the losses in butter.
Relatively stable period for milk price
The large dairy products will face a relatively stable period towards the autumn. Traditionally, the fresh products then have to take over. This gives little reason to expect a further rise in the milk price in the coming period.
This means that the opportunities on the income side are limited, but on the cost side there is indeed the danger of rising costs. This is because the drought has had a major impact on the yields of wheat, rapeseed and grain maize. That means higher prices for concentrates and simple raw materials.
The various textured products are also less readily available than in previous years and are therefore facing a tight supply for the second season in a row. This means that the prices are remarkably high immediately after the ex-country period. The feed prices even record the highest prices since 2013. It is difficult to say what the impact will be on the individual dairy farmer. This is because there are large differences in the stocks in the yard.
Differences magnified
The differences in yield will probably become painfully clear this season (partly due to the phosphate rights). Now that the rights have broken through the limit of €250 per right, it is mainly the top companies that can come along. Compensating with the purchase of rights is becoming increasingly difficult for companies with less liquid assets and few options remain.
Index adjusted
The Countus Dairy Cattle Index has a new composition as of September. A validation of the Dairy Cattle Index showed that it was no longer representative for the average Dutch dairy farm. This is a direct result of the extreme price increase of butter on the futures market. The new composition also does more justice to the milk price system of Dutch processors.
Herman van den Pol
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