Analysis Cheese
Fixed cheese market is slowing down for a while
The price rally on the European cheese market came to an end in January. At the same time, the market still feels quite stable, but there is a lot of uncertainty about the market situation in the second quarter.
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Last week, the DCA quotations for Gouda and Edam showed a minimal decline for the first time since last summer. This can be seen as a small correction to a historic price rally. Rarely have prices risen as fast as in the second half of 2021, with the market rising above €4.300 per tonne. In historical context, cheese is now extremely expensive. Cheddar rose a bit further last week, but here too the trend is over. The revival is partly due to the significantly lower milk supply in Northwestern Europe, which also affected cheese production. Dutch cheese production fell by some 20.000 tons to 953.000 tons last year, according to figures from the dairy product board.
The market has been expanded for the time being
There are currently no signals that the cheese market will come under pressure in the coming weeks. However, prices are currently at the top. This is because demand fell in the first quarter, which is consistent with the current season. Producers and processors currently do not have to go as far to complete orders and can take a breather from the hustle and bustle of recent months. This period is used to replenish the 'looted' stocks. In doing so, producers and processors are trying to create a buffer for the second quarter, when demand is likely to increase again.
The dairy trade is somewhat reluctant to take over positions, because it is uncertain whether prices can make any further progress. There is a risk of a price drop, as the market has historically been at the ceiling. On the other hand, with the current high inflation rates, the question is to what extent historical laws still apply. However, supermarkets and purchasing organizations have to get used to the high prices and offer resistance.
End of lockdown extra impulse
The coming weeks will probably be characterized by small price fluctuations, with low inventories providing a solid foundation. The milk supply is increasing seasonally towards the seasonal peak in May. This does not have to be a problem when sales figures increase again towards the second quarter. Now that the Netherlands is out of lockdown again, this could give demand an extra boost.