Transition and supply lower dairy prices

Beautiful days with a blue sky and a blazing sun. The terraces are allowed to open again after a long wait and where coffee with whipped cream, dairy drinks and soft and ice cream are being served. All ingredients that were expected to guarantee rising dairy prices. However, that turns out not to be the case. For the second consecutive week, DCA dairy prices even fell. The relaxation of the corona measures also seems to be one of the causes of this. However, the dairy trade continues to have rock-solid confidence in rising dairy prices for the coming period.

Suppressive effect on the market
Although the dairy factories in the Netherlands appear to be operating at maximum capacity, the management of supply on the Northwestern European dairy market plays an important role this week. Milk supply is declining, but less rapidly than expected. Especially in France (for example, skimmed milk concentrate) and Germany (raw milk), this results in slightly more supply, which puts pressure on the market. 

In addition, the question of relaxing the lockdowns in the European member states is actually still being sought. Now that catering can be held in restaurants again and the terraces are filling up, demand from retail (supermarkets) is weakening somewhat. On the other hand, the food service and catering industry is a cautious buyer, wised up by past experiences with corona measures that were variously relaxed or tightened.

Red colored markings
Many purchases are made for the short term or on an ad hoc basis, which makes it difficult for providers to set the right course for the market. In addition, the weather in the Netherlands is beautiful this week, but in countries such as France and Italy the weather on the terrace has generally been a bit disappointing in recent times. This also does not stimulate demand, apart from the fact that the share of tourism in these countries is still relatively limited.

Red-coloured quotations for 2 consecutive weeks do not discourage traders from seeing a positive outlook on the dairy market in the coming period. Milk supply is decreasing seasonally and demand is expected to remain stable, with occasional spikes upwards. Especially if major events are possible again soon. The transition from retail to food service in the dairy chain will be increasingly better organized in the coming weeks. 

Raw milk spot quotes
The market for Dutch spot milk remains thin with little supply and demand. The factories can process the milk well and the single free batch that is traded has the DCA spot quotation as a reference. The quotation for Dutch raw milk therefore remains at €37,50 per 100 kilos at 4,4% delivered. There is more milk available in Germany this week, causing the DCA quotations for Northern and Southern Germany to both fall by €1,50 per 100 kilos. Northern Germany quotes €33 per 100 kilos delivered with 4,0% fat and southern German milk costs €34,50 per 100 kilos.
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The DCA quotes for cream and butter should both post a loss. Cream in particular is suffering from the erratic purchasing behavior of foodservice buyers and the current mediocre market for butter. Cream therefore drops by €125 to €4.765 per tonne ex-factory, while DCA Butter drops €55 to €4.010 per tonne ex-factory.

Sports drinks support whey powder
The powder quotes also have to make small downward corrections. The DCA quotation of skimmed milk powder drops by €15 to €2.580 per tonne ex-factory, while whole milk powder has been depreciated by €45 this week to €3.170 per tonne ex-factory. Whey powder for food purposes is a minor exception, because the DCA quotation for whey powder increases by €5 to €1.080 per tonne ex-factory. Whey powder benefits from demand from specialists as a high-quality protein ingredient for sports drinks and baby food. 
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Things are quiet again on the foil cheese market, with slightly declining DCA quotations for Edam and Gouda. The cheese market is clearly waiting for new impulses, which may come again when the dairy chain is more organized again after the comeback of food service.

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