Analysis Cheese
Cheese production makes a spring and prices explode
Cheese prices keep pushing through to higher levels and are not fooled by the historical laws in the market. Scarcity is the keyword. The high prices have not yet led to a drop in demand, although that blow could still come. At the moment, the price rally mainly hurts the retail sector.
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For months, insiders have been thinking that cheese prices will level off, but that never happens. In fact, in the past two weeks the market has gained renewed energy. The DCA quotations for Gouda and Edam rose last week to €4.800 per tonne. Currently, the price sometimes already has a five for it. Customers who bid back invariably get rejected. Producers are afraid to sell large volumes in advance at contract prices that are too low. Prices of €6.000 per ton are required for delivery in the third quarter, market parties indicate. Buyers are reluctant to record volumes at these high levels, which is why spot trading often takes place.
Tough negotiations
The bill is currently on the table at retail. They cannot (or do not want to) pass on the rapidly rising cheese prices to the consumer one on one, because that is a deterrent. At the moment, cheese prices are still manageable for many consumers. However, if supermarket prices rise further, a drop in demand is likely. All the more so because purchasing power in the Netherlands and surrounding countries is already under considerable pressure. The negotiations between the retail sector and the dairy producers are being fought hard, according to the market.
Cheese production significantly lower
The cheese shortage is confirmed by production figures from Statistics Netherlands. In January, production in our country fell by 8,6% to 77.000 tons. The contraction was not flattered by a holiday, as New Year's Day fell on a weekend. The decline is related to the persistently low milk supply in Northwestern Europe. This also puts pressure on cheese production in surrounding countries. On the demand side, the market is receiving support from the end of the corona measures, which means that cheddar and mozzarella are particularly popular. The prices of these cheeses have therefore risen extremely rapidly. Cheddar is now trading above €5.000 per tonne. At €4.900 per ton, mozzarella is even more expensive than Gouda and Edam, while this cheese has a lower dry matter percentage.
The war between Russia and Ukraine does not directly affect the cheese market, but it does contribute to the heated market sentiment. This will probably decrease in the coming weeks. In the meantime, the peak of milk supply is approaching, but there is still no sight of the end of the price rally.