Spot and forward prices for milk powder neck and neck

With online dairy auction DAO On Monday, a batch of skimmed milk powder for animal feed was also sold for €4.000 per tonne. Although this concerns product that will be delivered from July, it is nevertheless a record price for a feed product.

In 2017 and 2018, large quantities of skimmed milk powder were purchased by the European Commission because prices fell below the intervention level (€1.694 per tonne). In 2019, these stocks were put back on the market and sold via tenders.
Since then, the skimmed milk powder market has gradually recovered. However, there was a small dip in the spring of 2020, with prices falling below €1.850 per tonne.

However, since August last year, a strong upward trend in prices has been observed. In mid-February, another decline seemed to be in sight, with the expectation that an increasing milk supply would cause some relaxation in the market.

The war in Ukraine provided a completely different picture. The already high energy prices (which play a major role in powdering milk), combined with concerns about disrupted supply lines and fear of running out of supplies, caused prices to skyrocket to new and unprecedented price records. 
In such situations, the futures market sometimes makes additional outliers, but this is currently not the case. The prices on the spot market and on the futures market (see the EEX), with comparable prices, both increase at the same rate.