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DMK futures market milk price drops sharply
The forward market price at which DMK dairy farmers can determine the milk price in the coming months will drop well below €40,00. This is evident from information that the company has sent to members. The price is also in line with the development of the Kiel raw material value and is a sign of the tension in the dairy market.
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Since autumn 2020, DMK members have been able to fix their milk price for a maximum of 30% of their business volume, on a voluntary basis. The argument is that this allows them to build in more business security, because they know what they receive for part of their production.
What DMK will pay as the normal milk price in the coming months has not yet been determined. This will most likely fall, but it is different from the forward price (called 'Festprijs' in Germany). This is determined on the basis of the value of butter and skimmed milk powder and applies for a period of 12 months in advance. Who has committed to April and May, can expect a price of €34,80 per 100 kilos (at German grades) for the fixed part. The June price will be 10 cents lower. For the two months after that, the price will go to €35,90 per 100 kilos. , while the September price goes to €35,80 per 100 kilos.
In January, Dutch dairy paid an average of more than €60,00 per 100 kilos. DMK in Germany paid €59,00 per 100 kilos, at lower levels than in the Netherlands. The difference between the current payment prices and the basic price offered for bulk raw materials such as butter and skimmed milk powder illustrates the tension in the dairy market.
In previous years, the 'fixed milk price/Festpreis' was mainly a stabilizing factor in business operations, but with the current, sharply falling dairy prices, it is unattractive to subscribe to it.