No falls in European milk prices

The average European milk price for the month of August is €34,37 per 100 kilos (with an annual supply of 1 million kilos of milk). It is an increase of €0,47 compared to July. However, if we compare the average milk price with the European milk price of August 2017, the current price is €2,04 (or 5,6%) lower.

An average year
Despite the fact that the European milk price is showing an increase this month, it is becoming increasingly clear that 2018 milk prices will not reach the 2017 level. In addition, milk prices rose sharply in 2017 at the end of the year, making it unlikely that the price difference will be made up in the final months of 2018. It means that 2018 will be an 'average' year.

On the other hand, not a single dairy farmer has chosen to reduce the milk price for August. The dairy companies Sodiaal (+€1,50) and Dairy Crest (+€1,90) showed the largest increases. A-ware recorded an increase of €0,10 in August FrieslandCampina has kept the milk price stable in August.

During the presentation of the half-year results, Arla indicated that it intends to use the (net) profit in 2018 as back payment to be paid out to members (due to damage caused by the drought). Based on current expectations, this could result in a supplementary payment of €2,30 to €2,50 per 100 kilos (on the milk delivered in 2018). This is approximately double compared to 2017.

Outside the European Union
If we look at dairy companies outside Europe, prices look slightly less rosy. The milk price of the Swiss Emmi drops by €0,30 in August. Fonterra is also declining (-€0,20). The dairy company has definitively set the milk price for 2017/2018 at 6,79 New Zealand dollars per kilo of milk solids (including dividend). That is a milk price of €30,77 per 100 kilos.

On the other hand, the American milk price (class III) shows a considerable increase. This rose from $14,10 in July to $14,95 per cwt (45,36 kg) in August. Milk prices (future contracts) on the Chicago Mercantile Exchange even show an increase to $16,26 (December 2018).

Further increases expected
The average milk price is expected to rise further in September and October. Arla has already indicated that it will increase the milk price for October by €0,90. This while FrieslandCampina has set an increase for September (+€1,20) and October (+€1). A-ware also increases the price for September (+€0,60).

The French Lactalis has now announced the milk prices for the rest of the year. In September the price increases by €0,50 and it leaves the price unchanged in October and November. The dairy company ends the year with a plus of €0,70 in December.