Foundation under milk price still made of concrete

The prices of butter and milk powder in particular are suffering from a dip in shape. The cheese quotation is moving more stable, although there is now some more price pressure on the market. The reason for the lower milk powder prices is largely due to the drop in demand in the Middle East and Asia, because they think the prices are too much. This is despite the fact that the euro is weak. In addition, China is in need of less product anyway due to the growing milk production in the country.

Meanwhile, DCA's butter price has dropped to €7.000 per tonne. Skimmed milk powder has fallen to more than €3.800. Both manufacturers lost about 5% to 10% in the past week. A decrease that can also be seen - except for one correction - after the price increase due to the war in Ukraine. There are no indications of a significant fall in prices, partly due to tight stocks.

Foundation not affected
The payout prices of dairy farmers are a few months behind the dairy price developments. At the moment, milk prices are still rising based on the advance that was visible at the end of the first quarter. Excluding the bonuses and premiums, the milk prices at almost all processors have passed the limit of €50 per 100 kilos. The raw material value is still above that, based on the valorisation of skimmed milk powder and butter. It has fallen from just under €70 to under €65 in recent weeks. Milk prices will not just rise up to these levels. This is because the commodity value is calculated at weekly rates, while contract prices are often concluded at lower levels.

The faltering dairy market of the past few weeks has not affected the bottom below the milk price, but only limits further room for growth. Nevertheless, milk prices are expected to continue to rise in June, albeit probably less sharply than before. This will reduce the large gap between the payment prices and the raw material value of milk.