Analysis DCA Dairy Cattle Index
Dairy yield remains below average
Milk prices are on the rise, but concerns in dairy farming continue to dominate. Among other things, about rising feed costs and the uncertainty about corona. What is the return of the Dutch dairy farmer at the end of 2020 and what are the expectations for next year?
In the month of November, the return of the dairy farmers in the DCA Dairy Cattle Index a small dip, with a low of 81,70 points in week 46. In the meantime, the Index has changed the price and an upward trend is visible. In week 49, the return scores at 82,70 points, with 100 points being the 10-year average.
With the current course of the Index, the line at the end of this year is still relatively close to the 5-year average. A relatively good development, without the fact that this average was well below the 100-point limit at that time.
uncertainties
The corona vicissitudes seem to have the dairy market in its grip next year, despite the prospect of a vaccine. At the moment, the dairy market is still influenced by the moderate demand from, among others, the food service. As long as the lockdowns continue, this situation is not expected to change.
Higher feed costs
Another persistent fact that puts pressure on returns is the high feed costs that dairy farmers deal with. On the roughage market there seems to be little prospect of price declines in the near future. Several products are trading at record prices for the time of year, such as spent grains. In addition, the chunk prices on the rise, a development that is expected to continue for some time to come, as raw material prices have still barely or not been able to stabilize.
Other costs and lower yields also make it difficult to recover returns. Inseminations continue, while calves yield less. Towards the end of the year, the phosphate rights will also come into play again. All this ensures that the milk price increases of the past 2 months cannot provide adequate relief.
Stable prognosis
Despite all the uncertainties, the high costs and the ongoing corona crisis, the DCA Dairy Cattle Index forecast has developed slightly more positively than last month. Although it is a relatively stable development with a prospect of 87 points by July 2021, this is a better prospect than the previously forecast trough around January-February. This trough has now been converted into a slightly increasing trend. Where last month's forecast ended at 83 points in week 21, this week now stands at 86,3 points. That does not mean that the road to recovery around the 100-point limit is long and uncertain.
Jorine Cosse
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