Analysis Dairy
Bargain hunters catch up with the dairy spot market
Usually the spot market takes a hit in the last weeks of a year, but now it's different. Liquid dairy prices are able to avoid major corrections, while solid dairy products are once again ramping up. What are the expectations for the coming weeks?
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The dairy market seems to end the year on an honorable note. In the sense that the tightness, which has been the biggest force behind the price explosion in recent months, will also continue around the holidays. There are hardly any surpluses on the liquid market.
Minor corrections
As in recent weeks, DCA Markets' spot milk prices continue to be around €50 per 100 kilos. Cream and skimmed milk concentrate do take a step back, but much less than expected. It cannot be ruled out that there will be another (major) correction next week, but insiders do not expect that yet. All the more so because the butter price closed the gap with cream last week in one fell swoop and has gone even further this week. This puts pressure on the cream price.
Solid market
Demand is usually difficult to release in these last weeks of the year, because buyers wait and speculate on a price fall. However, bargain hunters are failing this year. The market is in solid shape in the last weeks of the year. The holidays fall on a weekend, which is of course favorable. In addition, the milk supply in Northwestern Europe has made a significant impact, which dampens any surpluses that could arise. In addition, stocks of solid dairy products such as powders, cheese and butter are low. This allows dairy producers to build up some stocks when sales are at a lower level around Christmas and New Year.
Fixed market for early 2022
The market also feels stable across the board for the first quarter of 2022. Cheese prices (Gouda and Edam) are moving further away from the €4.000 per tonne limit from week to week. Milk powder prices also continue to rise, supported by the relatively weak euro, although there is resistance. However, buyers are getting the short end of the stick due to tight supplies.
Based on the current stable dairy market, dairy farmers can count on continued high payment prices. The basic milk prices are now all above €40 per 100 kilos. including bonuses and premiums, sporadically even more than €50 is paid. 'Conventional farmers command organic milk prices', the market jokingly says.
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