Five conclusions about the milk price rally

1. Historical increase in average milk price
Rarely has the milk price increased as quickly as in the first half of 2022. The average milk price in the Netherlands increased by more than €10 during that period to €55,76 per 100 kilos. This has been calculated on the basis of standard Dutch levels and an annual supply of 1 million kilos. In May, milk prices broke through the €50 barrier at most processors and in mid-July there is still a rapidly rising trend. Existing records have been exceeded in recent months, which means we can speak of a historic increase. 

2. Vreugdenhil leads with basic milk price
Vreugdenhil comes into the milk price comparator (basic) emerged as the winner. With a basic milk price of €59,43 in June, the powder producer towers above the rest. Vreugdenhil is also the only one with an average milk price higher than €50, calculated over the period January to June. FrieslandCampina follows in second place with an average milk price of €48,23, although the differences with other processors are small. The average milk price is also slightly higher than €48 at A-ware, Bel Leerdammer and DOC Kaas. Arla and Cono are underneath. The Scandinavian dairy cooperative is known that their milk price usually lags behind the average in the Netherlands. This is because Arla charges the same milk price almost everywhere in the different countries. The fact that Cono is at the tail of the pack is more striking, because the cheese producer from North Holland usually leads the leading group. The reason for this is that Cono is strongly committed on branded cheeses, this value lags somewhat behind the bulk segment.

3. A-ware best payout, including bonuses  
When we get the milk prices including bonuses compare, then the proportions are different. A-ware takes the lead with the Albert Heijn milk flow. The payout price in June was €61,39. On average, the payout level in the first half of 2022 was almost €55. In the meantime, even the €70 level has come into view due to a significant increase in July. The maximum milk price that could be achieved in the period January to June was above €50 for all processors.  

4. Price difference between conventional and organic has been eliminated
Another conclusion we can draw is that the differences between conventional and organic milk prices have almost disappeared in recent months. At FrieslandCampina, participants received the current PlanetProof flow in the past months even more milk money than the organic suppliers. This historical turnaround has to do with the high prices for commodity dairy, while organic chains are highly regulated. Surpluses and shortages will then become less apparent. This is less favorable in a demand market, but in a supply-driven market the valorization often suffers less. This is also the reason why Vreugdenhil currently scores well. After all, milk powder prices on the world market have risen high. With the focus on branded cheeses, Cono benefits less from the rally. In bad times the roles are often reversed.

5. Rise not over yet
The milk price has good prospects for the second half of 2022. So the cake is not over yet. Passing the €60 limit for the basic milk price is possible in the coming months. In that case, it is not unrealistic that the highest milk prices including bonuses exceed €70. The raw material value for the basic milk price is approximately €65 per 100 kilos based on the current value of butter/skimmed milk powder. This means there is still room. However, the dairy market has felt less solid in recent weeks and cheese, butter and milk powder prices have shown a slowly downward trend. This is creating uncertainty in the market, which will probably also slow down the milk price increase.