Analysis Milk powder
Export less important due to low milk supply
Prices of skimmed milk powder have continued to rise in recent weeks, despite the fact that powder prices are already at record highs. With a level of around €4.200 per tonne, Europe is no longer really competitive on the world market. Certainly not to distant destinations.
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However, the fact that the European Union is not competitive does not yet cause producers to worry unduly. And as long as the milk supply is tight and there is a high demand for skimmed milk powder from the European Union, this will remain the case. The global market is slightly less important in a situation like this. Moreover, the price does not say everything.
Americans have other problems
Skimmed milk powder from the United States is much cheaper, with a price of €3.700 per tonne. As mentioned, this does not say everything. They have other concerns. Due to logistical problems, it is often not possible to get milk powder to the port on time, let alone to ship it. This is really a headache for Americans. They are cheap (with prices still falling) and the largest exporter of skimmed milk powder in the world, but persistent supply problems also earn them a reputation as an 'unreliable trading partner'.
The fact that European traders won a large export order from Algeria last week (ONIL tender) also puts Europe's price problem into perspective somewhat. Moreover, skimmed milk powder from New Zealand is almost as expensive. With transport costs added, even more expensive. For a number of destinations - especially in sub-Saharan Africa - the high European milk powder prices are quite painful. European companies are seeing customers drop out, African buyers must look for alternatives.
The domestic market remains important
With the current prices for milk powder and the lower availability in the European Union, it is expected that the domestic market (in the European Union) will become even more important, especially for the Dutch business community.
The coming months will reveal whether the situation outlined above will be maintained. Despite the backlogs, milk production is increasing in Europe and the same is expected in the United States. It therefore seems likely that tension on the powder market will decrease and prices will fall, although major players are emerging the futures market I assume this won't become a thing until after the summer.
