In theory, 60 euros is feasible for milk price

The fact that milk prices above €40 can be regarded as high is from before 2022. Although the prices have long passed this limit, the margin on an average dairy farm has hardly improved in recent months. The high feed, fertilizer and energy prices put a strain on the bill.

Commodity value above €60
De bottom of milk prices in the Netherlands is just above the level of €45 in March. As a result, the payout prices are still significantly below the current commodity value. Based on the value of butter and skimmed milk powder, the raw material value of milk is currently above the level of €60. Based on the value of cheese, milk is worth just under €60. Compared to a year ago, milk powder and cheese prices have increased by more than 50%. That is unprecedented.

The high prices mean a new reality on the dairy market, to which many market parties still have to get used to. The dairy trade was used to buying up surpluses, but these are hardly available anymore. End users are just barely choking on the high prices, but it is hard to digest. And producers do not want to sell too cheaply. This means that the trade is sometimes syrupy. Parties scan the market to avoid mistakes.  

Contract prices at lower levels
It is not illogical that dairy farmers are not paid the raw material value of milk. This is calculated on spot prices. The contract prices (per quarter, half yearly or annually) are often still concluded at lower levels. If the dairy market can withstand the peak milk supply in May, contract prices will also be closed at higher levels. In that case, it is only a matter of time before the lower side of the milk prices cross the €50 threshold and possibly even to €60 in the long run. However, a great deal of water still has to flow through the Rhine before these levels can be achieved. In theory, however, it is not an unfeasible card at the moment. Certainly not for the higher end of the milk prices.