Inside Milk
Spot price of raw milk starts to fall
The period between Christmas and New Year is logistically a difficult period, in which prices normally come under pressure. This year is no different, but expectations for the first quarter of 2019 are fairly positive.
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It was expected that raw milk prices would show a decline. After all, some processing days are canceled around Christmas and New Year. The availability of raw milk on the spot market is therefore increasing. This means that the DCA quotation for raw milk (at 4,4% fat) drops by €2,50 to €33 per 100 kilos. There is clearly a downward trend that will probably continue until the first week of January.
Milk prices are also under pressure in Germany, especially in Northern Germany. There the DCA quotation (at 3,7% fat) drops by €5 to €30 per 100 kilos. The quotation for southern Germany drops by €3 to €33,50 per 100 kilos.
Room price further reduced
Cream prices are also under pressure. The DCA cream price drops by €450 to €4.500 per tonne. Earlier this week, volumes settled at lower levels, but prices picked up again towards the end of the week. The reason is that there will be no processing capacity failures next week, which means there is still demand.
With the current cream prices, butter can be produced with excellent margins and that means that the factories are running at full capacity. Prices appear to have a lower limit of €2019 per tonne in the first half of 4.000. That is a strong signal, because until recently it was expected that prices might fall through that limit.
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Cheese prices also show a stable picture (Gouda 45) near €3.000 per tonne. It is also expected that there will be no major corrections for cheese in the first quarter, although price negotiations are still ongoing. As a result, the uncertainty factor is still quite large.