Milk powder market is lifting again after a dip

The milk powder market is supported by low stocks resulting from a considerably reduced milk supply in Northwestern Europe. It can be argued that anyone who wants to stock up on volumes has to pay a heavy price. The DCA quote for skimmed milk powder briefly moves below the level of €4.000 per tonne. That is also where the challenge lies, because milk powder is pre-eminently an export product for distant destinations. Countries in Africa, the Middle East and also China sometimes bite at these levels. This is also the reason that until a few weeks ago prices came under pressure and doubts set in.

Low stocks and high cheese prices
Why are prices rising again since mid-May? According to insiders, this is mainly a result of the low stocks. Due to the even better valorisation, a lot of milk goes into the cheese box during the peak season (but also before that). This is partly due to the high drying costs as a result of the overstrained gas market. As a result, less skimmed milk powder comes onto the market, but more liquid whey. However, there is little demand for it. Whole milk powder is mainly produced on request by Dutch processors. 

Market is picking up again 
Coming back to the export question. Sales to China have fallen sharply. In the first quarter, sales fell by 32% to over 17.000 tons. Other major customers, such as Indonesia and Algeria, also imported considerably less in the first quarter. The lower export volumes continued in April and May, according to exporters. African demand seems to be improving somewhat at the moment, which may explain the turnaround in the market. It seems to be only a matter of time until skimmed milk powder is back above €4.000 per tonne. Whether there is still a lot of stretch after that remains to be seen.