Analysis milk
Base under high milk price is slowly declining
The dairy market is already under further pressure, but for the short term a number of quotations are still price-holding. The DCA quotation for skimmed milk powder and whey powder even rose slightly. It is different for further afield. Buyers are less and less willing to pay the current high prices for cheese, butter and powders, which erode the basis under the high milk prices.
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Where inflation and declining purchasing power cause problems in Europe, outside Europe it is the high price level of the European product. This problem in the export markets has been going on for much longer. Customers in Africa, for example, have therefore been looking for the cheapest product for some time, and preferably in small(er) volumes.
Seen in this light, the higher quotation for skimmed milk powder and whey powder this week seems confusing. However, the effect of a small revival in an otherwise fairly calm market is at play here. The major trend on the milk powder market is downwards.
With skimmed milk powder, the variant intended for the animal feed market is about €100 per ton cheaper than the variant for human food, but intrinsically actually more valuable. Skimmed milk powder for animal feed is unstandardized for protein content and therefore usually contains more protein than the standardized food product. It is a reason why some buyers still pay food prices for a product worthy of animal feed.
The butter price fell further this week and harder than last week. It does not mean that this trend will continue, because butter quotations have been particularly stable in recent months and not all producers are recording falling prices. However, the cream quotation is also weakening further.
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All prices at the cheese market fell again this week, but mozzarella lost the most. Sales conditions for mozzarella are therefore becoming less good seasonally, while availability is good. The price drop was the most limited for Gouda and certainly Edam foil cheeses. For cheeses with the Frau Antje label, a surcharge of an average of 15 to 20 cents per kilo is even requested, but this surcharge will come under pressure given the market conditions, traders believe.
There is a lot of uncertainty about price formation for the longer term. All parties believe that further declines are coming, but how much and how quickly is still an exciting question.
There are also price drops on the spot market for raw milk, but not major ones yet. There are, however, regional differences. In France, the normally much lower spot milk price has also been around 60 cents per kilo in recent weeks. That is really different now. In Germany and the Netherlands things are a little calmer, but down.