Inside Milk
Why spot milk is suddenly becoming more expensive
Although the prices of dairy products are under pressure, the prices of spot milk are rising. What is the reason for this?
Read this article?
Become a subscriber and get instant access
Choose the subscription that suits you
The spot prices of raw milk have been stable for some time, but this week there is clearly an upward movement. The availability of milk is limited in both the Netherlands and Germany. The peak in milk supply is also now behind us; In Germany, for example, milk supply has been declining for 4 weeks, while production 1 year earlier only fell this week. Moreover, German milk supply is almost 2% behind last year. This is striking, because production in March was still ahead.
Declining milk supply drives up spot prices
In the Netherlands, the availability of milk has been limited for some time. Now that supply is declining, this is becoming more apparent. Although there will be a processing day canceled next week (Whit Monday), milk is being sought. In the Netherlands, the DCA quotation for raw milk therefore increases by €1,50 to €32 per 100 kilos. Prices are also rising in Germany, which is supported by purchasing interest from Italy.
The higher spot milk prices are not fueled by rising dairy product prices, because the quotations for milk fat in particular are under pressure. Butter prices have fallen to €3.600 per tonne at spot level. This also means that cream prices are under pressure; the DCA cream price drops by €100 to €4.150 per tonne. There is a particular lack of demand from the fresh segment, which means that the majority of the cream has been processed into butter. The price pressure on milk fat also puts the cheese prices under pressure.
Skimmed milk powder on ceiling
The protein market is significantly more positive, but the upside potential for skimmed milk powder seems limited. Demand from destinations outside Europe has fallen slightly. What is also striking is the fact that skimmed milk concentrate has a wide price range. Product is traded from €1.500 to above €1.600 per tonne. The DCA quotation remains stable at €1.570 per tonne, although the undertone on the market is rising.
In general, the dairy market is looking for a new balance. The limited availability of raw milk in Northwestern Europe does provide starting points for dairy product prices. Whether this can put a floor under the milk fat quotations remains to be seen.