Has the Dairy Cattle Index bottomed out?

The return in dairy farming has fallen again in recent weeks, according to the Countus Dairy Cattle Index. The big question is: has the bottom now been reached or will the Dairy Cattle Index fall further?

Most milk prices are about June This has had a negative effect on the return in dairy farming. In addition, dairy cooperative FrieslandCampina the guaranteed price for July has also been reduced. While the Countus Dairy Cattle Index still fluctuated between 90 and 95 points at the beginning of June, this level has now fallen.

The Dairy Cattle Index has fallen to a level of 4 points over the past 89,40 weeks, with 100 being the long-term average. This is 3,9 points lower than about 1 month ago. This also means that the return on Dutch dairy farms has been below average throughout the year.

Bottomed out
The negative return in dairy farming was partly caused by the quotations for the milk fat (such as butter) and the cheese prices were under pressure in mid-June. This sentiment has turned over the past week, because butter prices seem a bottom found at approximately €3.600 per tonne.

This is also reflected in the forecast for the Countus Dairy Cattle Index, because here too the bottom seems to have been reached. It is expected that the Index will continue to rise in the coming weeks and may return to the average level towards the end of the year.

Major differences in yield
Geke Enting, dairy farming specialist at Countus, says that this declining Index is accompanied by an increase in differences at the farm level. On the one hand, the differences on the revenue side are increasing, for example due to surcharges linked to the production method. On the other hand, the effects of the droughts of 2018 and 2019 influence the increase in costs. "For example, feed stocks built up in 2018 were used, as well as the financial buffer for, for example, the purchase of phosphate rights."

Kimberly Baker

Kimberly Bakker is an all-round editor at Boerenbusiness. She also has an eye for the social media channels of Boerenbusiness.

k.baker @boerenbusiness. Nl

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