Analysis DCA Dairy Cattle Index
Dairy cattle index shows cautious recovery
The increase in the return of dairy farmers will also continue in late June and early July, according to the DCA Dairy Cattle Index. The future looks brighter, but there are still many developments afoot that could turn the outlook.
The recovery of the DCA Dairy Cattle Index has stagnated in recent times, but is still moving upwards towards the 100 point mark. From April to June, the index developed by 15 points and ended at 80 points. Over June to early July, the return in the index increased by 4 points to 84,1 points. With this development, the return is close to the score in the same period in 2019.
uncertainties
Many developments are currently underway that could have an effect on the returns of Dutch dairy farmers. The future is therefore relatively uncertain. The high seasonal costs continue, milk prices are no longer what they used to be and there is a lot of uncertainty about the government's feed track: will this be implemented or will there be another alternative?
In addition, the corona crisis, as it seems now, will continue to exert pressure on the dairy sector for some time. Although the milk prices what seem to be stabilizing, it could be some time before they return to pre-crisis levels. The seasonal costs for, among other things, contract work also continue.
However, there is also a small bright spot: the concerns about another dry summer have been somewhat alleviated by the rain of recent weeks. In addition, the costs for roughage stable at the moment, some perhaps a bit on the high side, but there are also prices of straw and meadow hay, among other things, that have turned out to be relatively cheap in recent weeks.
Future expectations
For now, the future looks relatively rosy. Where the outlook last month was still focused on a year-end position of 86 points, with the 10-year average as the 100-point limit, it now stands at about 91 points. It is striking that after reaching 91 points in week 52, a stabilization is expected to take place until at least week 4 of 2021.
Although the return in the DCA Dairy Cattle Index continues to improve, the question is how long this will remain so. At the moment, the expectation until the end of the year is positive, but suppose that Minister Schouten's feed measure is continued and takes effect in September, the question is whether the positive trend will continue. The feed measure can cost dairy farmers extra money, as long as the yields do not outweigh this, it probably means little good for the yield.
Click here for more charts
Jorine Cosse
© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.
