Dairy market sees it sunny, but wait for the sun

Limited supply, rising demand and positive market sentiment. All the basic ingredients for rising prices on the dairy market in the coming weeks are present. With summer approaching, the market seems to literally and figuratively need to be warmed up a little extra by the sun. More sun and higher temperatures will further boost dairy consumption, especially if terraces, catering and restaurants are given more space with further relaxations in the corona policy.

No magnet for turnover
This prospect alone brings optimism to the dairy market, even if it doesn't happen this week yet. Next week it will be Whit Monday, but this holiday is traditionally not a magnet for extra turnover, as Easter and Christmas are. The supply of milk is limited. In Germany and France, milk supplies have already passed the spring peak, which was lower than in the same period in 2020, partly due to the cooler spring.

The peak in milk supply also appears to have been reached in the Netherlands, although some traders wonder whether dairy farmers are trying to maintain milk production with the current milk prices when the sun and higher temperatures arrive. All in all, a large milk pool is no longer expected in Northwestern Europe, which is also reflected in the DCA spot quotations for raw milk. 

The DCA spot quotation for Dutch raw milk this week amounts to €20 per 37,50 kilos of milk delivered at 100% fat. With an increase of €4,4 per 0,50 kilos, this is the highest level since October 100. The same trend is being followed in Germany. Both the spot quotation for Northern and Southern Germany also increased by €2020 per 0,50 kilos delivered at 100% fat. Northern Germany works out at €4,0 and Southern Germany costs €34,50 per 36,50 kilos. 

A striking leap is made by the DCA listing of cream. This will increase this week by €135 to €4.825 per tonne of finished work. Cream remains in demand, partly due to the opening of the terraces and catering establishments, and there are little to no stocks. The current price level of cream is therefore special during the peak of milk supply. In terms of price, cream is also one above the butter equivalent, i.e. the current price does not allow more to be made into butter. A small correction next week therefore seems obvious.

The DCA quotation for butter amounts to €4.050 per tonne, an increase of €50 compared to a week earlier. The price increase of butter therefore somewhat symbolizes this week's dairy market: slowly creeping up, but still waiting to see what will happen. Because there are plenty of variables: at what pace will the catering industry and restaurants ultimately open, what does this mean for the current strongly increased retail sales, how does the dairy market respond to the lockdowns, what does milk production do when the weather gets warmer, and so on.

Many buyers therefore do not look far ahead and mainly trade for the short term. On the fat side, for example, foil cheese and mozzarella are following similar price increases as butter. DCA Foliekaas Gouda increases by €25 to €3.035 per tonne, Edam increases by €45 to €3.010 per tonne. The DCA quotation for mozzarella increases by €55 to €3.120 per tonne. However, the quotations for Cheddar Curd and Mild decrease slightly.

The latter also applies to the milk powder market. The quotations for both whole milk powder and whey powder are slightly under pressure. The DCA quotation for skimmed milk powder avoids this and increases in price by €15 to €2.605 per tonne. Finally, the quotation of skimmed milk concentrate also increases after a few weeks of stability, by €45 to €2.010 per tonne.

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