Dairy market is still full of question marks for 2023

The turbulent fourth quarter ended quietly this week. Not much business was done due to the holidays. At some trading houses the books even remained empty on some days. Only in the liquid segment was there some movement, which resulted in higher prices. The Christmas dip was quite deep this year, but as expected the upward trend could be started again. Spot milk rose again to above €40. Cream and skimmed milk concentrate are also climbing out of the trough, with some potential for increase in the light of butter and skimmed milk powder prices.

Hidden question?
It is difficult to predict in advance what the story will be for 2023. The sharp increase in milk supply in Northwestern Europe and a drop in demand due to high inflation are somewhat paralyzing the market. Although the prices for cheese, butter and milk powder have been significantly reduced, it is difficult to find a bottom. The idea is that buyers sometimes hide, knowing that the offer will not be stolen from under their noses. But this 'wish' of producers can of course also be the father of the thought. The powder market in particular is also struggling with little export demand on the global market, with the revival of the coronavirus in China offering little prospect of improvement in the short term.

How big will inflation pain become?
The current decline in payment prices will probably not immediately inhibit the incentive for dairy farmers to take their foot off the accelerator. Because milk prices below €60 are of course also fine. The hope in the market is based on a return of demand. The inflationary pain may be less severe due to the wage compensations and the consumption pattern will remain at the same level, although that is still a big question mark.