Inside Milk
Dairy spot market reacts coolly to heat wave
It will be sweltering hot in Northwestern Europe in the coming days, according to the weather forecast. The mercury will continue to rise above 30 degrees until next Friday. The dairy market reacts here...
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So far, the impending production dip has not led to higher prices on the liquid dairy market. It is noticeable that the availability of milk is declining. At the beginning of the week, milk processors were much more willing to sell than at the end of the week, when it started to dawn on them that supply could drop significantly next week.
Spot milk price remains unchanged
The DCA spot milk quotation (both in the Netherlands and Northern Germany) nevertheless remains at €32 per 100 kilos. The quotation for skimmed milk concentrate drops €80 to €1.815 per tonne. The decline is due to an ample supply from France in combination with falling prices for skimmed milk powder. The cream price rises to the top of the range to €4.000 to €4.100 per tonne, between which the quotation has fluctuated for weeks. Due to the warm weather, it is possible that liquid prices will still accelerate, but a major revival is not likely.
Cream is already overpriced compared to butter. The DCA butter quotation also drops this week by €20 and €3.265 per tonne. Earlier this week, at the Global Dairy Trade in New Zealand, we also saw the price of butter drop. Global inventories are ample, which means that the downward trend is expected to continue. Cheese prices also continue to feel weak, with the quotations for Gouda and Edam both well below €2.800. The decreased demand from the out-of-home segment is a loss here.
Stronger euro slows down exports
On the world market, exports are being slowed down by the strengthening euro. The eurodollar rate has risen in recent weeks from €1,12 to €1,18, which is a large increase in currency terms. The export of milk powder is also affected by this, perhaps even more so than with cheese. Based on the downward trend, it is very questionable whether the price of skimmed milk powder can hold above the limit of €2.000 per tonne.
All in all, the falling dairy prices are not a favorable development for milk price developments, which have just started to pick up again, but perhaps the warm weather can still provide a surprise.
Click here for explanation of the DCA quotations (liquid)
Click here for explanation of the DCA quotations (cheese)