Inside Milk
Stock intervention powder is now almost empty
The good sentiment in the market for milk powder is continuing. The European Commission (EC) has again sold a large volume of intervention skimmed milk powder this week, which means that the stock is now almost empty.
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The intervention volume sold this week amounts to more than 80.000 tons (with an underprice of €1.554 per ton). This means that there are now approximately 22.000 tons still in the Brussels warehouses. Although this volume is substantial in itself, it can still be seen as one remaining.
It is negligible compared to the volume that was still in storage 1 year ago (approximately 378.000 tons). The missing stocks will most likely further fuel the good sentiment on the powder market.
Lower milk supply is irritating
This is especially true because raw milk is limited in availability in Northwest Europe in terms of processing capacity. Dutch processors have been struggling with a declining supply for some time and Germany has also been experiencing a decline since October. In the penultimate week of 2018, supply was 2,2% lower than in 2017.
Raw milk was requested by various parties this week, causing the DCA quotation for the Netherlands to increase by €1,50 to €35 per 100 kilos. The spot milk price is also on the rise in Germany. The DCA quotation for skimmed milk concentrate benefits from this development and increases by €200 to €1.400 per tonne.
Fat prices are hitting the ceiling
There seems to be some slack in prices on the fat market, despite the fact that the butter price (ZuivelNL) rose by €140 this week to €4.280 per tonne. The DCA cream price is also increasing: by €100 to €5.100 per tonne. Whether the price increase will continue remains to be seen.
Milk fat prices are already trading at a high level, creating incentives to drive the market upwards. The good demand for milk fat (in combination with the lower milk supply) is currently priced in at the current cream and butter prices. On the futures market (EEX), butter quotations remain below €4.800 per tonne.