Dairy prices continue to rise due to shortage of milk

The dairy market is in the last weeks of the summer holidays. Relatively many short transactions have been made in recent weeks. Now that most traders are returning from vacation, longer-term trading, especially the fourth quarter, is coming into focus again. For this period, major buyers are slowly entering the market to hedge, which could lead to additional purchasing power in the coming weeks. And yet the market has already set a clear upward trend in recent weeks, especially during the holidays.

Short on supplies
This means that producers in many dairy segments, such as cheese and cream, are running out of supplies. The availability of raw materials within an acceptable distance does not seem to help them either. Milk supplies in large Northwestern European dairy countries such as the Netherlands, Germany, France and the United Kingdom are lower than expected this period. And the composition of the milk does not help either.

For example, in the Netherlands, the fat and protein levels in milk are clearly decreasing. Due to the high concentrate prices, many dairy farmers choose to feed the animals extra fresh grass, now that the growing season is fine, in order to save feed costs. Because the levels of fat, for example, are lower, this automatically means that more milk is needed for the production of cream, for example. 

All-time high is in sight
This means that the processors can use the milk themselves during this period and the supply of Dutch spot milk is particularly scarce. The buyer had to pay more euros for the batch of free raw milk that went on sale this week. As a result, the DCA quotation for Dutch spot milk has been cut to €42,50 per 100 kilos at 4,4% fat, an increase of €1 compared to last week. This means that the all-time high of €44,50 from 2017 is slowly coming into view.
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German spot milk is also certainly not widely available, although this has not translated into a clear increase in the price this week. The DCA quotation for spot milk in Northern Germany remained the same at €40 per 100 kilos at 4% fat delivered, while Southern Germany €0,50 per 100 kilos in value against up to €42,50 per 100 kilos. The limited availability of milk seems to guarantee a further upward movement of the dairy market, but the trade does not want to worry too much about this expectation. With all the corona issues in recent months, the market appears to not always be adhering to the standard rules of thumb. 

Eastern Europe a good buyer
For the time being, current developments mainly support the prices of dairy quotations on the fat side. For example, the DCA quotations for butter and cream are increasing again, although it must be said that prices have stabilized in recent trading days and sellers seem more willing to trade. Cream thus exceeds the €5.000 limit again with a DCA quotation of €5.020 per tonne of finished work, an increase of €90. Butter remains on average just under €4.000, with a DCA quotation of €3.995 per tonne finished work. That's an increase of €65. The Eastern European market is a good buyer of cream, although logistical challenges have played a role in the last week.{{dataviewSnapshot(6_1629405814)}}

In the egg white the positives in the odds are slightly weaker. For example, the DCA quotations for whole milk powder, skimmed milk powder and whey powder increased slightly. A clear dissonance this week is Skimmed Milk Concentrate. There the DCA quotation drops by €70 to €2.440 per tonne of dry material finished work. Concentrate turned out to be too expensive, for example to make skimmed milk powder. This led to less demand and therefore a price correction. Finally, the foil cheese market is becoming more stable, with only Gouda's DCA quotation rising slightly this week by €15 to €3.120 per tonne of finished work. 

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