Inside Milk
Dairy returns step back, prospects weaker
The DCA Dairy Cattle Index had to take a step back in June. Although the milk payout prices still rose slightly, the underlying dairy quotations fell. These determine the trend return of the index.
Read this article?
Become a subscriber and get instant access
Choose the subscription that suits you
There were also changes on the cost side that negatively affected returns. Manure removal and compound feed became more expensive.
Falling dairy prices
Although expectations were quite high, the dairy market was unable to meet these predictions in the past month. While more and more corona restrictive measures were lifted during June and the food service increasingly came into operation, the expected rising demand for dairy products was somewhat disappointing. As a result, butter and milk powder, among other things, had to give up some ground compared to May, which depressed the index. A somewhat wider supply of milk worldwide also played a role in this. At the end of June, butter was trading at €3.920 per tonne and milk powder at €2.510 per tonne.
Removal of slaughtered cattle and calves yields a little more
While yields for dairy products were down, beef cattle and calves were in reasonable demand. More money was paid for both slaughter cows and fasting calves than in the previous month. Slaughter cows in Leeuwarden quality (U) yielded approximately €0,12 per kilo more than at the end of May and sausage cows of 1st quality were approximately €0,10 more expensive. Calves yielded approximately €5 each more at the end of June than a month earlier. Slaughter cows (U) therefore recorded €4,22 per kilo and sausage cows of 1st quality recorded €2,78 per kilo at the end of June. The price for black and white bull calves of >50 kilos was €112,50.
Costs show an increase
On the cost side, prices rose. Manure disposal became more expensive in many places by between €0 and €0,50 per cubic meter. Feed prices also continued to rise. A-brok recorded an increase of no less than €0,65 and amounts to €28,00 per tonne (LEI).
With the rising costs for the dairy farmer and the slightly lower dairy prices, the outlook is currently slightly less positive than a month ago. In the coming months it will become clear whether the milk prices will hold up or whether they will also be corrected in line with the dairy quotations.