Arla moderately positive about milk price

The dairy group maintains the protein price in the Netherlands at €4,36 per kilo, and the fat price remains at €3,97 per kilo. The milk price for June is €34,51 per 100 kilos, based on an annual supply of 800.000 kilos of milk and the standard Dutch contents (4,41% fat and 3,47% protein).

Impact of Brexit
Due to Brexit, the dairy processor is cautious, as 25% of turnover is realized in the United Kingdom. The devaluation of the British pound is a crucial factor because it affects Arla's returns much more than the returns of competitors with a smaller market share in the UK.

Due to this decisive market position, Arla has adjusted its strategy regarding the reference price. This means that the additional price that Arla pays on top of the price of reference companies has been adjusted downwards. However, the ambition remains to pay a better milk price than the German DMK and the Dutch dairy cooperative FrieslandCampina.

Positive market developments
Market developments are still moderately positive for Arla. The Danish dairy farming industry also seems to have confidence, because the milk supply is showing an increase. Milk supplies are also increasing in the United Kingdom, Ireland and Poland. "Only the normally price-setting players in Europe, Germany, France and the Netherlands are still not seeing an increase in milk supply," Arla notes.

The European milk supply does not depress the development of the milk price. The falling butter price does, although world exports are picking up somewhat. The price for skimmed and whole milk powder shows a slightly increasing trend, as does the price of cheese. Worldwide there is no additional supply of milk compared to last year. Among the key players (New Zealand and the United States), extra milk production is leveling off and Australia and Argentina are also producing less milk.

Click here to view the milk price comparison.