Analysis Milk
Borderline or milk price can remain above 40 euros
Although the differences have narrowed considerably, spot milk remains undervalued compared to the payment prices that dairy farmers receive. At FrieslandCampina, Vreugdenhil and Leerdammer, all processors are still working on aligning prices with the valorization of milk. It becomes borderline or ...
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For the time being, the average milk price has fallen by just €0,30 to €40,66 per 100 kilos, but processors such as Cono and Vreugdenhil have yet to announce the payment price for this month. Vreugdenhil had already set a bottom in June, so the downward pressure from that side seems to have been countered. Cono implemented a mild reduction in June and is therefore in the process of doing so fine-tune. From this perspective, an average milk price above the psychological limit seems feasible, but then the other processors must no longer make further reductions in August. DOC Cheese is the uncertain factor in this, as the reductions so far are not final in nature.
During the reductions in recent months, the milk price comparator shaken up considerably. DOC Kaas and Vreugdenhil no longer dominate the leading group, while FrieslandCampina has emerged as the best payer, contrary to expectations. And only A-ware has remained in the top 3.
Spot milk prices are stagnating
The revival of the spot milk price is stagnating at around €35 per 100 kilos for the time being. It is expected that spot milk prices may pick up in the coming months, at least as the long-term average shows. In terms of movement, that trend is being followed reasonably well this year, although the spot market is moving below the long-term average. In the past, spot milk prices often peaked in September or October, when milk supplies have already begun their seasonal decline.
Despite the fact that the seasonal decline has started, the milk supply is still ample. Especially in Northwestern Europe, where countries such as the Netherlands, Germany and Belgium have started producing significantly more milk. Now that milk prices have fallen sharply, the incentive for dairy farmers to maintain strong production has been removed. This makes it likely that the milk surplus will slowly disappear in the coming months. This can also relax the dairy market. Dal will also be needed to keep milk prices above €40, as the air on the market has clouded over a few weeks ago.