Brussels butter mountain is shrinking, how is the market responding?

Let's start with the bright spots. The corona vaccine is leading to some optimism among producers and traders, without this being pre-sorted, as happens on the stock exchanges, for example. The lower stocks in private storage are also positive. Butter stocks in intervention have now fallen to below 25.000 tonnes. This while there was still double the stock in stock this summer. Large volumes were sold by German, Irish and Dutch parties, especially in October, according to the latest figures.

Some air for butter
The result of this is that the European butter market is finding some breathing space. The DCA quotation for fresh product increases this week for the second week in a row by €25 to €3.335 per tonne. These are modest pluses that indicate that the downward pressure has disappeared. At the same time, one must guard against too much optimism, as the remaining stocks themselves are still quite large. And large volumes are also stored in Europe that are not subsidized by the European Commission and are therefore not registered.

How the butter market will move towards the end of 2020 will depend greatly on retail demand. And that is related to the still unknown government measures in various countries around Christmas and New Year. Cream, as a liquid raw material for butter, moves just above €4.000 per tonne. This is quite high for butter producers, but limited availability and excellent retail demand result in such prices. Bargain hunters for cream must be patient, just like for spot milk, prices of which are fairly stable at around €36 per 100 kilos. 

Powder up, concentrate down
When we zoom in on milk protein, we see concentrate prices falling, while skimmed milk powder is rising slightly. The concentrate prices were quite high compared to powder and this resulted in a correction. The fact that powder prices are picking up slightly is due to tenders that Algerian purchasing interest was issued this week through the purchasing organization Onil.

The DCA quotation for skimmed milk powder increases this week by €30 to €2.165 per tonne. This makes the end product more expensive than the liquid raw material in the form of concentrate, the price of which drops by €110 to €2.035 per tonne. On the positive side, stocks in private storage have fallen to 12.000 tons, although the already low stocks did not prevent higher prices. 

Weak cheese market
Cheese still feels weak, although supplies are not necessarily plentiful. The culprit is a lack of demand from food service due to the lockdowns. Trade is often limited to the short term, with prices for Gouda and Edam briefly below €2.800 per tonne. 

Click here for explanation of the DCA quotations (liquid) 
Click here for explanation of the DCA quotations (cheese)