Milk scarcity drives up liquid dairy prices

The Dutch dairy market is starting 2021 optimistically. Normally, demand for dairy is somewhat tame at the beginning of the new year, but that is not the case this year, traders indicate. Due to the corona crisis and the lockdowns in many avenues, the situation is of course different than usual. 

Due to the lockdowns, sales opportunities for the catering industry have fallen sharply, but demand from retail partly compensates for this. Market parties are trying to respond to this as best as possible. There is currently enough demand in the market and there is also sufficient processing capacity, but the milk supply is scarce. The DCA spot milk quotation for the Netherlands remains unchanged this week at €34 per 100 kilos, but the quotation for cream increases by €115 and amounts to €3.895 per tonne. 

Export demand pulls up powders
The demand for protein in the form of skimmed milk powder is good. Export demand from China has already emerged smoothly at the beginning of 2021, market parties indicate. Export containers appear to be in short supply. The futures market also hints at rising prices later in 2021. However, supplies of skimmed milk powder are limited and that provides an incentive to increase production. 

The skimmed milk concentrate prices will therefore continue to rise and the quotation will increase by €220 to €1.980 per tonne. The DCA quotation for skimmed milk powder increases this week by €20 to €2.235 per tonne. Whole milk powder takes a small step up to €2.745 and whey powder goes up in price to €845. 

Butter and cheese are still quite stable
Sentiment on the butter market is also a bit firmer, despite German retail implementing significant price reductions at the end of 2020. At the same time, the unregistered butter stocks are reportedly still large, which is why price increases in the short term are not expected. The DCA quotation remains unchanged this week at €3.340 per tonne.

Cheese producers also notice the limited availability of raw milk. At the same time, the cheese trade still needs to loosen up a bit in early 2021. The underlying influence of corona remains noticeable, because sales of mozzarella and cheddar in particular have fallen due to the lockdowns. Sales of Gouda and Edam are much better, thanks to good retail demand. Prices, on the other hand, are stable at around €2.800 per tonne. The coming weeks will show whether the cheese market can make a fist, or whether the stable to slightly upward trend will continue. 

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