Inside Milk
German milk raw material price climbs to record high
The German raw milk price for November is at its highest point in almost eight years. In January 2014, a 'Rohstoffwert' ex-farm was quoted at €45,00 per 100 kilos of milk. The latest calculation by the IfE (Institut für Ernährungswirtschaft) in Kiel goes way above that.
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For the month of November, the institute calculates a raw material value of €50,10, while it is quite possible that something will be added the following month. The IfE calculates the raw material value based on the yields of butter and skimmed milk powder. Each of them is currently not at a record high, but the combined yield does push the raw material value to a peak.
The raw material value mentioned is not a price that dairies can pay directly to their suppliers. This is because their revenues depend on a series of contracts with different terms, for a diverse range of products.
Germany's largest cooperative DMK, for example, pays a milk price of €40,00 per 100 kilos for December. That is the performance price. Excluding surcharges for Vlog, logistics and participation in the Milkmaster program, this leaves a basic milk price of €38,20 per 100 kilos, at 4% fat and 3,4% protein. Others don't come much above that either.
There is a chance that dairy prices will drop in the new year, but milk supplies will remain smaller than normal for the time being, including in many other areas of the world.