Analysis Dairy
Milk powder market is struggling to recover
While butter and cheese prices are clearly on the rise again, the powder market is finding it more difficult to recover from the price dip that was still visible in the fourth quarter of 2022 and also in January.
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The price pressure on the European milk powder market has disappeared, but that is all for now. The prices for food-suitable products move around the rate of €2.550 per tonne. Feed quality is a few hundred euros per ton cheaper. Whey powder also moves fairly stable in mid-February, whole milk powder increases slowly.
China
In contrast to cheese and butter prices, the powder market is having more difficulty recovering. This is mainly due to the uncertainty about sales opportunities in China, the most important market outside Europe. The Chinese government claimed last week that they have defeated the coronavirus, but that statement deserves a few nuances. The people's congress will take place in early March, where President Xi Jinping will receive his third term. Positive news about that conference is of course welcome. China also claimed to have mastered the virus in 2020, but after releasing the corona measures, infection numbers have recently risen sharply. In the short term, this is negative for the sales opportunities for milk powder in the Asian country. In the longer term, it does offer the prospect of additional export demand, but the market is not yet prepared for this.
Chinese dairy import figures in the fourth quarter were weak and the lowest since 2019. Volume did pick up somewhat in December. Combined (full and skimmed) milk powder imports increased by 30% to 67.781 tonnes, compared to the same period the previous year. The import of whey powder even increased by 45,3% to 57.590 tons. Imports of baby milk powder showed a drop of just under 20% to 23.665 tons. Whether the recovery will continue in the new year remains to be seen. European exporters speak of persistently weak demand, although this is also because the United States supplies a relatively large volume.
Global market
The milk powder market was also unable to gain ground at the Global Dairy Trade that took place this week. In fact, the price fell by more than 2% to $2.769 per tonne. The American market is also slowly moving downwards. Expressed in dollars, the price differences on the world market between Europe, the US and New Zealand are now extremely small.