Prices on dairy market to exciting level

This is evident from the latest dairy quotations from DCA Markt. Prices for raw farm milk rose fastest in the Netherlands and northern Germany. In the Netherlands, the price rose by 8,9% in one week, and in Northern Germany by 9,9%. In the south of Germany it was relatively quieter.

Price increases for cream and skimmed milk concentrate were slightly more modest, but the cream price is slowly but surely approaching €7000 per tonne. This week, according to the DCA quotation, €215 was added to the price and ultimately €6800 was quoted. There is still some time to go to the record level of €8000 per tonne at the end of 20117, and the price may not rise that far now. 

In the meantime, the price of butter is also increasing. At least, as far as it is traded. Compared to the cream price, the butter price is still lagging behind. So it doesn't pay to make butter or to sell this product.

Price level is becoming quite exciting

However, many market parties find it quite exciting, even at this price level. All the more so because many other dairy prices are also moving towards the top of the known bandwidths. Skimmed milk powder is priced at around €3000 per tonne, Gouda foil cheese is already above €4.000 per tonne. Even mozzarella, a cheese that usually does better in terms of price development in the summer when the weather is on the terrace, is still rising in price and is now trading well above €3500 per tonne. However, the price increase for cheeses this week is slightly lower than last week.

Perhaps all dairy prices will rise much further in the coming weeks, but market parties are also taking into account that milk supply will slowly but surely pick up. Because the current high prices are achieved due to a tight supply and a lot of pent-up demand from large buyers. The big question is whether the market will remain as favorable if dairy manufacturers continue to increase their payment prices and farmers increase production.

Higher payment prices for the farmer

Various research agencies and institutes calculate that the current prices for cheese, butter and skimmed milk powder now justify significantly higher payment prices. Prices are quoted in the range of 46 to 48 cents per kilo, which is considerably higher what is now paid on average. Calculated in terms of basic dairy, the processing of milk into cheese and whey is the most profitable. Production of milk powder and butter lags slightly behind in terms of returns.

Fictitious payout prizes

The above (fictitious) payment prices for the farmer do not take into account the fact that many processors also have to deal with long-term contracts, which, for example, were concluded months ago and which continue until the new year. However, these now less favorable contracts will gradually expire and there will then automatically be room for further increases in payment prices. A sharp increase in milk supply in the coming weeks could hinder this price recovery. But first, prices on the dairy market would have to go down. There is nothing to indicate that yet.