Analysis dairy
Powders feel weaker, cheese does not shrink
The DCA quote for skimmed milk powder is surprisingly holding up this week, even though many traders are seeing a weaker market and falling prices. It somewhat outlines the dichotomy in the market, where European sales are still quite strong and stable on the one hand, and the extra-EU market on the other, where things are much more difficult.
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Companies that do a lot of business with parties outside Europe also pay more attention to, for example, the GDT auction. Powder prices fell again this week and intensified. Based on that and other indicators, skimmed milk powder might fetch around €3.900 per tonne. The forward quote for Q3 even points to around €3.800 per tonne. Yet it is not all negative.
Butter became slightly cheaper, but relatively much less than cream. Butter traders are now again concerned about the effects that the current drought may have on the availability of product after the summer.
The cheese market is relatively fixed and stable, although few transactions are made. Those who want to do business mainly look at the third quarter, the period after the summer. Many buyers currently think this is still far away and are therefore focusing on other matters. A lot can still happen in the meantime.
An exception to this picture is the mozzarella market. Prices continue to drop there. Not at a high pace, but there is still some pressure escaping from the market. The price was therefore relatively high in recent months.
Prices fell most noticeably in liquid dairy. In addition to cream, skimmed milk concentrate also suffered a significant loss. This was not just due to weaker demand. A series of disruptions at a number of larger processors (four) also put pressure on prices.
It does not alter the fact that the milk supply also increases seasonally. Although considerably less milk is produced across the board than last year, a spring peak - no matter how limited - always has an effect on prices. In France, that peak supply seems to be almost over, but in Belgium, the Netherlands and Germany the supply is still increasing.