Milk prices are going back to the old normal

"The milk price will not be able to remain at €60, but we will not go back to €40 overnight." That was a frequently heard statement when milk prices peaked in the fourth quarter of 2022. It turned out to be a vain hope. In the meantime, a dire reality has arisen for dairy farmers that price levels have come awfully close to €40. In just a few months, some processors already deducted €20 from the milk price. Never before has the price drop been as sharp as it is now.

The latest calculation of the raw material value of milk, based on skimmed milk powder and butter, has been reduced to €38,60 per 100 kilos by the IfE (Institut für Ernährungswirtschaft) in Kiel. The valorization based on Gouda bulk cheese is not much better. Although this calculation can be seen as the bottom of the market, it does indicate how the milk price will fare.

Sliding milk prices
The sliding milk prices in the Netherlands and Belgium show no signs of slowing down yet. Also in April, some factories cut prices by more than €5. The past shows that the price drop first becomes less severe and then works towards a bottom. This probably means that the payment prices will also be adjusted in May, June and perhaps even in July. It is therefore not surprising that accounting firms are once again warning about the liquidity positions on dairy farms. Milk prices are returning to the 'old normal', but the costs on dairy farms are no longer aligned with this. 

Spot milk prices have even dropped to below €30. This is indicative of the ample milk supply in Northwestern Europe. Processors who 'have to' sell on the spot market incur significant losses from the parties concerned. Bargain hunters rarely strike, because the processing capacity is full in many places. Moreover, factories are currently reluctant to produce for stock, especially since storage capacity is filling up considerably in many places. The payout prices will not be as colorful as the spot prices in the coming months, but that is all.