Milk powder market hopes to get out of the valley via Algeria

Although the weather feels autumnal, it is still the summer holidays in the Netherlands. The dairy trade has slowed down a gear in the past few weeks and the calm in the market is still noticeable. Prices have not fallen further since last week. Very slowly, butter and cheese prices are rising again, but these movements can mainly be described as corrections. The cheddar market is still under pressure due to a wide supply from Ireland and the United Kingdom.

Milk powder market is booming
The most striking thing this week is the milk powder market. The DCA quotation for skimmed milk powder food quality increases by more than €100 to €2.250 per tonne. This is also a correction to a strong price appreciation in the past week, but the movement is greater than with butter and cheese. That is also logical, after all, the milk powder market had fallen much further.

The upward correction is being driven by a new Algerian purchasing tender from Onil, which certified European powder exporters can tender for. This offers an opportunity to put stocks on the market, as they amount to several tens of thousands of tons. Now that China is not on the market, Algeria should be the playmaker on the market, or so the thinking goes. With an oil price above $80 per barrel, Algeria has the necessary purchasing power on paper.

Record volume
This has been evident from the European export figures all year long. In the period January to May, Algeria bought 115.000 tons of European skimmed milk powder, according to Eurostat figures. Never before has the Algerian import volume been so high and it was also twice as much as in the same period last year. This is remarkable, given that Algeria has recently tightened its import rules. In concrete terms, this means that all milk powder must be halal certified. This caused problems for some exporters, but according to insiders these have now been resolved.  

However, no miracles should be expected from the Algerian question. Because despite the urge to buy, the milk powder market has been under heavy pressure in recent months. Nevertheless, the market has now pinned its hopes on Algeria to get out of the price trough, given the poor prospects in China.

Milk supply dries up slowly
The coming weeks will show whether the milk powder market can continue to rise. This also applies to a lesser extent to the butter and cheese market. A price-supporting factor is that the milk supply worldwide is slowly drying up. Nevertheless, on balance the market still looks very fragile, but more momentum may arise once the holiday period is over. This usually sets the market in motion again.