Relationships seem lost in the dairy market

The background is that milk production worldwide is still lagging behind, or that the product barely leaves the country, as in the US. This while the available inventories low worldwide .

Butter lethargic at the 'hot' cream market
At the beginning of this year, the butter price lagged far behind the cream price. This rose sharply throughout Europe, while the butter market seemed to remain quite lethargic. That large price difference has now largely been corrected. Butter is now also priced historically high. Whether that is a tenable situation or not remains to be seen later.

Easy mozzarella
Something similar is happening on the cheese market. Mozzarella has rapidly become more expensive and is therefore priced higher than traditional cheeses such as Gouda, Edam, Cheddar and Emmentaler. A type of cheese that is quicker to make, with more moisture and less dry matter, wins out over 'solid' cheeses. Anyway, mozzarella is in season: the catering industry can open completely again and the terrace season has started.

There is still a situation of imbalance on the liquid dairy market. Over there the spot market for raw milk is lagging behind with the current valorization options. That is also a situation that does not happen often, except occasionally around the New Year. But then it is because the milk has to go and the factories are running at half capacity.

Free milk fat in New Zealand
In New Zealand there is a similar problem with whole milk powder. On the last one GDT auctions you saw the sales prices of skimmed milk powder (SMP) increasingly towards those of whole milk powder (WMP). This is already a thing of the past on the NZX futures market. There is SMP already more expensive then WMP. Logically, the price of the last product must catch up, otherwise the milk fat is free and expensive suddenly becomes cheap. But will that also happen in a market with such high prices? Will the Chinese be willing to pay an additional $500 per tonne for the New Zealand powder?

Risk management on point
In a 'normal' market, many parties might go 'long' on whole milk powder from New Zealand, but what is the risk if you do that now? It is certain that the risk management department at many companies is currently on high alert. The further prices rise, the more is at stake.

Sometimes an expensive product is suddenly no longer in demand, because there is too much of it or the market is changing. For example, at the end of last year, large quantities of demineralized whey, an expensive baby food ingredient, were suddenly sold to the animal feed industry because there was too much of it. This market is now recovering well, helped by shortages on the dairy market as a whole.