Analysis DCA Dairy Cattle Index
Positive developments in dairy farmer returns
Due to all the uncertainties of recent months, the return of dairy farmers for August ended up in a trough. Now that Minister Schouten's animal feed measure has been withdrawn, there seems to be some breathing room. What is the expectation for the coming months in the DCA Dairy Cattle Index?
After the analysis for July, the price of the DCA Dairy Cattle Index is in a trough. The score fell in week 33 to 81,60 points, more than 3 points less than in July. A cautious recovery is now visible. For week 35, the last week of August, the score is 82,7. The withdrawal of the feed measure is expected to have had an impact on this. The feed measure would probably have entailed additional feed costs for most farmers, which put pressure on the yield. In the DCA Dairy Cattle Index, 100 points is the long-term average.
Room to breathe
Now that the feed measure has been withdrawn, many livestock farmers are expected to be able to take a breath. The extra feed costs that it entailed are now off the table. The expensive summer season is almost over. The rain of recent weeks has also provided some relief, as the grass has picked up growth again in many places. If the growing weather continues, there may still be 2 cuts of grass from the land and the maize harvest will gradually start. Then peace returns for a while.
Milk prices are also showing a cautious recovery. Most processors have not fallen again since June, only FrieslandCampina made a negative correction to the milk price last week. However, it remains above the lowest point in June. Now that the warm, dry months are making way for the autumn, this is benefiting the milk supply. With a recovering milk price, this also provides some relief for the dairy farmer.
Uncertainties always remain
Not every crop has been able to benefit from the rain of recent weeks. The corn has had a hard time. There are major regional differences, especially in the south maize suffered greatly from the dry summer. This also has an impact on the return. When the harvest is disappointing, some dairy farmers have to incur additional costs to buy feed.
The corona crisis also continues to play a role in the background. For now, the situation seems stable: catering continues to run, despite it being not optimal, people can still go to the supermarket and as long as the weather remains nice, eating an ice cream during a bike ride is still possible. As long as these sales markets continue to operate, the situation in the dairy sector is expected to remain stable. When this changes, for example due to another closure of the catering industry, new problems will have to wait.
Outlook
At the moment the prospects are good. The dip expected in October last month moved into recent weeks. There is still a long way to go, but the sounds are positive so far. A positive sprint is expected in the coming weeks, which will level off slightly at the end of the year and then pick up again. In the forecast of the DCA Dairy Cattle Index, the return of the dairy farmers is now continuing to work its way up to 91 points in week 13 of 2021.
Jorine Cosse
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