Uncertain dairy market, with fragile recovery here and there

The price for skimmed milk concentrate also fell. Even harder than that of raw milk, while the latter was still on the rise last week.

Yet it is difficult to draw far-reaching conclusions from this. More important in that respect is the absolute price level of both raw milk and concentrate. They still reflect a completely different level than that of the prices that dairy farmers are paid by their buyers. Whether they are cooperatives or private companies.

The prices for butter, cream, milk powder and cheese are slightly better, but they also still reflect a considerably lower price level than is paid. Fortunately for the processors, there has been a slight price recovery in the last few weeks, which is particularly evident this week from the significant rebound in cheese prices.

However, a cheese price of €3,20 does not allow a milk price of €50 per 100 kilos to be paid. In addition, the cheese manufacturers earn little or nothing from the whey. At least not on regular whey. Whey powder for animal feed now costs almost €700 per tonne. The largest part of this price consists of drying costs.

The thick whey that leaves the factory has yielded between 0 and €150 per tonne in recent weeks. Maybe the price is a little higher now, but that product does not support the cheese yield. Things are slightly better with milk fat. The prices of cream and butter have skyrocketed in the last week and a half. The butter price rose by almost €1.000 per tonne, but is now falling again.

It went too fast for a moment. The stories are that traders and buyers in the food and retail sectors were short on supplies and had to take additional cover in the short term. This has not become a permanent fixture. The DCA quotations on the milk powder market also rose this week. Here too, an intermediate sprint occurred in the price trend, just like with butter and cream. For a few days, extra high prices were paid for skimmed milk powder. Then the price level dropped again as buyers dropped out. Otherwise, the powder market is stable to slightly positive, but the underlying sentiment is uncertain.

The cause of this is the combination of a generous milk supply in Northwestern Europe, with milk that also contains high levels of fat and protein. While structurally less is sold than is necessary to keep the market in balance. There is too little export and buyers in Europe are not as keen as last year, according to various parties in the market. This situation also makes the prospects for the coming weeks uncertain.