Analysis dairy business
The dairy market is increasingly living on installments
Looking at the developments in liquid dairy, and that compared to factory prices, there seems to be more and more balance in the dairy market. The spot milk prices have been below the prices paid by the factories for a long time, but not by a very great distance and the cream and concentrate prices are not super bad either. Nevertheless, the dairy market is increasingly living on credit.
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The reason is that sales of milk powders in particular and, to a lesser extent, butter are not going well. Stocks of relatively expensive manufactured products build up, but lose value. This is most clearly visible in the quotation of skimmed milk powder. Traders complain about far too little real trade. Too much product remains stuck in the EU. This is because there is too much competitive supply on the global market from other exporting countries that are also not getting enough of their product. Buyers in countries with less purchasing power naturally benefit from this.
Mega importer don't participate
The main cause of the declining sales is the built-up dependence on China and the fact that this mega-importer is seriously failing this year. The ideal solution is for this country to buy more again, but China no longer has the money for that. The other option is to lower dairy prices further and - necessarily - also pay farmers less. The industry is also struggling with this.
Skimmed milk concentrate and skimmed milk also remain priced fairly stable. This is also due to demand for fresh production. This demand not only comes from the Netherlands and surrounding areas, but also from Southern Europe. The supply is drying up a bit there.
Stiff on level
The cheese market continues to broadly follow the course of the past few weeks. There have been small price fluctuations, but the price remains at a relatively high level. Not compared to last year and not entirely compared to the milk prices paid, but compared to other dairy products. It is and remains the best-yielding commodity for producers.
Sales of Gouda cheese and mozzarella also seem to be continuing well, while the age of foil cheese in particular is not increasing. That is a great achievement from the cheese industry's perspective. At the edges of the market there are some doubts here and there as to how long this can continue, but it is not much more than that.
The spot milk price for raw milk continues to ripple in a relatively thin market. The price is slightly higher in the Netherlands this week, quite stable in Germany and remarkably high in France: up to €0,50 per 100 kilos. The drought has struck here. However, the peak prices mentioned remain reserved for home-grown milk.
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