Drop in demand tackles milk powder prices

The turnaround in the milk powder market is remarkable, as prices initially held steady at record high levels. The DCA quotation for skimmed milk powder rose to above €4.200 per tonne, while the quotation for whole milk powder rose to €5.300 tonnes. However, high prices are killing demand. Despite the weak euro, European products have priced themselves out of the market, insiders indicate. American product is – expressed in dollars – significantly cheaper. In the meantime, that difference has been corrected again. 

Speaking of demand, European export volumes are under severe pressure. Eurostat figures show that export volumes of skimmed milk powder in January and February were 20% lower than last year. China in particular imported significantly less, but export volumes to Algeria, Yemen and Nigeria are also under pressure. Sales to Indonesia did increase, meaning that the country has now surpassed China as the largest importer.

The downward trend appears to be continuing, as Chinese import figures for March were also considerably lower. The declining export figure is probably the result of a combination of the sharply increased prices and container transport costs. This also slows down the sales of whey powder, which mainly affects the Netherlands.

Global Dairy Trade significantly lower
The dip in form is not just limited to Europe. There is a trend break worldwide, as evidenced by the significantly lower Global Dairy Trade (GDT) this week. There, whole and skimmed milk powder (-6,5%) as well as cheddar and butter lost considerably. It is a signal that doubt has crept into the dairy market across the board. Due to the low stocks and milk supply, extreme price falls are not likely, but the market is now back on the ground.