Inside Milk
GDT stimulates European milk fat prices
Thanks to improving sales opportunities on the world market, the valuation of milk fat is clearly getting a boost this week. What does this result in when we look at the DCA spot quotes?
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The significantly higher butter price on the Global Dairy Trade continues to work in Europe. Since Tuesday, March 19, butter and cream prices have clearly been moving upwards. Compared to competitors on the world market, European milk fat prices were somewhat undervalued. That does offer upside potential. The DCA cream price increases by €400 to €4.800 per tonne. This increase is somewhat flattering, because cream prices were well below butter prices.
Various sources report that butter prices are rising and are now trading at a price level of €4.200 per tonne. Next week the butter market will be supported by the extra demand around Easter. However, care must be taken against too much opportunism, because European butter stocks are quite ample.
Brexit postponement?
Thursday, March 21 is an important day in the European dairy trade, because a vote will be taken on a postponement of Brexit. Brexit, which is still scheduled for Friday, March 29, makes British dairy manufacturers reluctant to maintain stocks. The trade barriers in the event of a hard Brexit could lead to a significant downgrade. That is why British dairy processors 'dump' cream and butter at relatively cheap prices on the European mainland; this also explains the previous price drops on the butter market.
The valuation of milk protein is stable this week. Exports dropped somewhat in March. In January, European Union exporters sold a record volume of 86.800 tonnes on the world market. This is an increase of 53% compared to the same month in 2018. Demand from Asia (China and the Philippines) in particular increased. Cheese prices are also stable, and stocks are not large.
Spot price of milk (still) stable
The DCA raw milk quotation is stable; in the Netherlands the price remains at €31,50 per tonne. In the background it is said that prices are moving cautiously upwards, supported by German milk supplies. It has again fallen below last year's level. In short: the appreciation of milk fat is on the rise, but milk protein, on the other hand, is moving somewhat directionally.