Analysis Milk powder
Milk powder export opportunities reduce pressure on milk price
The hard euro is currently the biggest threat to European dairy exports. Otherwise, the cards don't seem badly shuffled. Despite a slightly rising price for skimmed milk powder, there are temporarily good export opportunities. Competition from elsewhere in the world seems to be weakening somewhat and there is demand in the Middle East, Africa and parts of Asia. It does not directly support the farmer's milk price here, but it does curb the downward pressure.
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The skimmed milk powder price in the EU and the Netherlands has suddenly and quite unexpectedly risen again in recent weeks. A new tender from Algeria was identified as the cause.
Import agency Onil wants to purchase even more milk powder. There is also buying interest elsewhere. Europe is not in a bad position, because the other major exporters (the US, New Zealand and South America) have less to offer. But the race is not over yet for the EU, because the price increases in the EU in recent weeks and the hard euro mean that the Americans and New Zealanders can offer cheaper. However, they must have something to sell.
In the meantime, it is important for Europe to export milk powder in order to take the pressure off the internal market. In the past period, the internal market was quite weak, although it was attractive for parties in the EU that wanted to cover their long-term needs.
No revival in prices has yet been seen for whole milk powder. It is striking that the export of this product from the EU has been relatively good in recent months. Better also than expected from experience in recent years.
The question is of course whether the dairy industry was able to make any margin, because the price paid to dairy farmers also remained quite high.
In terms of export destinations, European milk powders mainly rely on markets in the Middle East and North Africa and partly also on Asian countries, other than China. Exports to Indonesia and Malaysia are also becoming more difficult, statistics show. In the case of these two countries, there are trade disputes with the EU, such as about deforestation-free products and also about nickel.
However, there appear to be more opportunities for additional European milk powder exports in the coming months than in recent months. This is mainly because there is less competitive pressure from elsewhere. However, it must be taken into account that New Zealand will also enter the market again in September with new supply.
It is still very uncertain whether China will finally purchase more product again. If it does happen, it will provide extra breathing space for all exporters.