Dairy commodities beat the day market

Prices and weekly quotations for cream and butter in particular rose sharply this week, as shown by the DCA quotations. In combination with the increasing quotation for skimmed milk concentrate, they justify a purchase price for raw milk of €0,60 to €0,65 per kilo. These are unheard of prices, and may only be feasible in special situations. Yet it is striking that the spot milk price does not follow this movement.

Traders have no good explanation for this. The current weekly quotation also does not fully reflect the breadth of the price spectrum. Although the average for the Netherlands and Northern Germany is, according to the quotation, €0,55 per kilo ex works and around €0,57 per kilo delivered, here and there up to €0,59 per kilo has also been paid. But those are the outliers.

Fear of a change in the market
It may also be the aforementioned fear of heights that is starting to weigh on buyers. Dairy prices continue to rise, but this also increases the fear that sentiment in the market could suddenly change and buyers will be stuck with expensive raw materials. For some traders, expensive dairy is a material that you want to get rid of as quickly as possible. It is said that it is too expensive and financially dangerous to have much of it in stock.

Not all traders and processors have the appetite to purchase expensive dairy products. Especially those who still have relatively low retail contracts to serve cannot wait for the market to turn. But they cannot turn the market around either. For the time being, prices on the dairy market are still rising further. Some customers or consumers then drop out, but due to raw material shortages that also occur elsewhere on the market, new buyers appear on the other side. Even for butter, which is now priced historically high.