Corona easing gives dairy market a boost

The better sentiment is clearly reflected in DCA's liquid dairy quotes. Cream increases by €323 to €3.003 per tonne. Skimmed milk concentrate is also taking a step up. The pluses for German spot milk are striking; the quotation for the Northern German market increases by €3 to €24,50 per tonne.

Less German milk than expected
The increase is a result of milk production that lags behind expectations. German dairy farmers may have anticipated the lower milk price or the ongoing drought. Production is lower in Northern Germany, where it has been quite dry in recent years. The market is hearing that factories have therefore had to cancel sales contracts. The official supply figures must show whether the story is correct or whether it is just inflated market sentiment.

Perspective
The permanent dairy market is also clearly more positive now that restaurants can (partially) open again in the long term. This is of course positive for sales to the food service, although there are still many stocks hanging over the market that must first be cleared. But the market may be helped by the milk supply, which is (almost) on the decline in many countries.

The skimmed milk powder market is now increasingly moving away from the intervention level and is on its way to the limit of €2.000 per tonne. The market still feels fragile. So whether the line can be crossed remains to be seen. Cheese prices are also slowly rising, but here too, no miracles should be expected.

Two bumps
The liquid dairy market still has 2 hurdles to overcome in May. And that is the loss of 2 processing days at Ascension Day and Pentecost. The upside potential therefore seems limited, but the low point is probably behind us. 

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