Analysis Cheese
Cheese price continues to rise surprisingly fast
The revival in the cheese market – which started last autumn – has not yet come to an end. Prices always manage to push through to higher levels. This far exceeds expectations in the market. The big question is: Will the upward trend continue?
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Few insiders expected that cheese prices would also rise in January and February. At the end of 2021, the general thought was that the cheese market would level off in the generally weaker first quarter in terms of demand. Although the overheated market has indeed cooled down somewhat, price increases remain the order of the day.
Scarcity drives up prices
Retail has also often anticipated a flattening (or even declining) market in the first months of this year. Many volumes for this period were not purchased in advance, in the hope of lower prices. As a result, there is now a lot of demand for relatively large volumes, which with the current tight supply leaves plenty of room for higher prices.
Both Gouda and Edam are in demand and therefore scarce. Mozzarella and cheddar are, according to traders, even scarcer in relative terms; they are hardly available. In the meantime, DCA quotations have risen above the level of €4.500 per tonne. Now that the corona measures have been significantly relaxed and the catering industry is allowed to open again, demand has also increased. Cheddar prices in particular have skyrocketed in recent weeks and are now approaching the €5.000 per tonne mark.
Based on historical market laws, it is likely that cheese prices will level off as the peak milk supply in May in Northwest Europe approaches. This did not happen in recent weeks. During this period, there are signs that the cheese market will level off, traders note. This is partly due to the fact that negotiations with retailers are very difficult. Buyers have to get used to the high prices, which have not occurred for years. It is inevitable that the cheese volumes produced will increase.
Incident or structural?
The question hanging over the market is whether the current prices are incidental or structural. You'll be lucky if you know that. The top management of FrieslandCampina dared during the presentation the annual figures yesterday (Tuesday, February 22) not to burn our fingers on the question. In the meantime, buyers and sellers continue to scan, resulting in relatively few long-term volumes being contracted. Considering the fact that milk supplies in many important production countries such as the Netherlands, Germany and France are several percent below the level of recent years, the cheese market feels very solid.