Bottom below milk prices doesn't just disappear

In recent summer months, milk powder prices have been under constant pressure due to a combination of weak internal demand and a lack of competitiveness on the global market. Europe was just too expensive. This situation has been partly rectified, while demand from the EU itself is increasing again. In addition, many buyers have often only covered a small part of their needs.

Limited production of milk powder
In the meantime, it is becoming clear that not only milk production remains small in the EU, but that the production capacity for milk powder has decreased due to the closure or decommissioning of drying towers. Sometimes this is because of energy costs, sometimes also because of the CO2 footprint.

Prices in Eastern Europe now highest
This situation again leads to rising powder prices, with the special feature this time that prices in Eastern Europe are rising faster than in the West. For example, Irish powder (SMP) was still available this week for around €3.200 per tonne, while in Poland €3.800 to €3.900 was already being asked. The same was seen with whey powder. The high drying costs especially hurt the animal feed sector. Where possible, drying is avoided and liquid product is used.

Cheese prices actually had to give up some ground, just like with powders across the board. Cheese was (and still is) the best-yielding dairy variety. As a result, an increasing part of the milk pool went into the cheese bin. Ultimately this leads to a kind of oversupply. It is therefore not surprising that parties in the market register an increasing age of the cheeses offered. The high retail prices also make consumers more cautious when purchasing cheese.

Less premium with butter
The price of butter also fell slightly this week, but few further conclusions can be drawn from this. The price now moves slightly up, sometimes down again, but remains within a reasonably fixed bandwidth. Traders do note that, for example, a premium product such as Kerrygold is increasingly being displaced on the German market by cheaper home-grown products.

The slightly weakening butter price was offset by a rapidly rising cream price again this week. Cream almost reached €8.700 per tonne. Other liquid products also rose in price, but less. Moreover, the volumes traded were small.

The logistical problems of the past few months seem to be subsiding somewhat. For many dairies, this provides significant relief from the stress of getting everything picked up and delivered.