Dairy market walks around with a price prop

Meanwhile, prices for milk powders and cheese (as well as those for fresh dairy in the store) increased much smaller steps.

There is something wrong with the translation, especially to retail. Processors invariably complain about this too. This is often done anonymously, but this week the boss of Arla in the United Kingdom also felt the need to vent about this.

For their part, supermarkets are having difficulty accepting much higher dairy prices and going along with a reality that is also new to them. New retail contracts have already been concluded at higher price levels, but not yet to an extent that processors can comfortably handle. On the one hand, they suffer because they have to buy expensive dairy products that they themselves lack (which their members/suppliers cannot supply) on the open market. On the other hand, they suffer because they still have purchasing contracts that are too cheap. Butter, cheese and fresh dairy products do not yield what they should.

Regardless of what retail does, the fact remains that protein-rich products are currently lagging behind compared to fat-rich products. This is certainly the case in Europe. Here the weight of cream and butter is paid for almost in gold, in New Zealand whole milk powder is cheaper than skimmed milk powder, especially on the futures market, and the milk fat is supplied free of charge, so to speak.

(in blue and red the New Zealand prices in US dollars, the DCA quotes are in euros)

According to market experts, the New Zealand situation is the result of a complicated combination of capacity shortages and trade policies. The New Zealand dairy industry is mainly focused on the production of whole milk powder and is less able to produce skimmed powder. New Zealand would also like to offer the full product at a more favorable rate. New Zealand butter is not free when produced loose, but it is cheaper than in the EU.

The fact that New Zealand whole milk powder is offered cheaply is strange in itself, because there are hardly any dairy stocks to be found anywhere. Only in the United States are relatively large volumes of milk powder still stuck. Due to persistent logistical problems, it is not possible to get these products out of the country properly, causing the Americans to be seen as an unreliable supplier. In a sense, this is fortunate for Europe, because this part of the world - whatever the internal price ratios may be - is by far the most expensive supplier on the world market.

However, in times of large surpluses this would have been worse than at present. Due to a persistently low milk supply, the internal sales market in the EU is more important than ever before.