Analysis Cheese
Cheese market succumbs to extra ditch milk
As quickly as cheese prices went up this spring, the market is now falling so quickly. A cocktail of negative news means that cheese prices still have no solid ground just before Christmas.
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The underlying causes of the price fall have been known for some time. A lack of demand in combination with an unexpected sharp increase in milk production is disrupting the foundation for the high prices. In the meantime, the DCA quotations of Gouda and Edam have already fallen considerably below the limit of €4.000 per tonne. Cheddar and mozzarella are in the same downward boat. In just two months, 25% of the market value has been lost.
In 2022, the cheese market was characterized by shortages for a long time, but there is now a threat of oversupply. Retail buyers are very reluctant to do business and are waiting for the price drop. In addition, there is a drop in demand on the store shelves now that the purchasing power of consumers is under pressure. We are also heading for the first quarter of the new year, which is traditionally weak in terms of consumption.
Much more milk
At the same time, milk production is growing rapidly. In November, Dutch milk supplies were almost 5% higher than the same month last year and also at the highest level in five years. Few had anticipated this extra ditch of milk. It is logical that the high payment prices would stimulate additional milk production, but this order of magnitude can be called extreme. Milk production is also growing quite rapidly in Germany.
A price floor on the cheese market is still not in sight by the end of 2022. The trend in the first quarter will probably also be downwards, is a widely shared expectation in the market.