Milk powder market is waiting for demand impulses

Meanwhile, milk powder prices are no longer rising, but are below the long-term average. With the exception of some brief upturns, the market has been in a downward spiral for months. Last March, the DCA quotation for skimmed milk powder peaked above €4.200 per tonne, shortly after war broke out in Ukraine. The milk powder market came into decline much earlier than butter and cheese.

Intervention not appropriate
The question is when the market can find a bottom. Due to weak demand and ample milk supply, downward pressure remains strong. There is sometimes talk of intervention in the market, but that is an exaggeration. The prices at which European politicians in Brussels take action are several hundred euros below the current market value. Insiders expect that this will probably not happen.

In the meantime, stocks are running quite high. Finding external storage capacity is difficult and also expensive. This also dampens the demand for trading houses to build up stocks for speculative purposes. The demand for feed-worthy milk powder is also weak. This is probably partly related to the shrinking pig herd in Europe, which simply means there is less sales.

Waiting for demand impulses
Demand impulses are needed to break the downward trend. This mainly focuses on China, which can make or break the mood on the market. Despite the opening of the Chinese economy, exports remain weak, although the export figures for January were certainly not disappointing. On balance, Member States sold 60.000 tonnes that month. This was considerably less than in 2022, but in line with previous years. Producers think that more demand from China may come later this year, but this is mainly fueled by hope.