Liquid dairy again steals the show in a quiet market

In the powder market, stocks are accumulating and prices are falling. Exports are needed to get the market going again, but that is not easy, because there is a lot of competition and purchasing power outside Europe is weak. The butter market is also weak. The valorization is therefore disappointing. At the pure commodity level, no more than about 37 cents per kilo of milk is earned from skimmed milk powder and butter, market parties calculate.

In order to be able to export skimmed milk powder again, further price reductions are necessary, perhaps to below €2.000 per tonne of product, several traders believe. The new GDT auction next week will provide a better indication of this. The results are eagerly awaited. The current skimmed milk powder quotation there is still well above the GDT level. 

The GDT quotation for whole milk powder is also a lot lower than the European quotations. Many buyers on the world market have little to spend and, due to a lack of financial resources, buy the cheapest products, such as fat-filled milk powder with whey protein instead of milk protein. The large stocks of unsold milk powders also do not make it easy to loosen the market.

A similar situation occurs with butter. Sales are difficult, stocks are in short supply and if there is any trade, cheap old product gets in the way of the fresh supply. As indicated last week, this essentially means there are two prices for butter: one for fresh product and one for older butter from the warehouse. The first product is about €100 above the quotation, the last €100 to €200 below.

Apart from mozzarella, the cheese market is also slightly weaker.

Prices for Edam and Gouda foil cheese are slightly under pressure, but the decline is limited for the time being. Cheddar prices are under a little more pressure, mainly due to cheap British and Irish supply. According to the parties, the natural cheese price remains reasonable at a level of €100 to €150 per tonne above the foil cheese price.

There was little noticeable price pressure and difficult sales on the liquid dairy market this week. The supply is quite limited, but an increasing demand for raw milk in particular caused prices to rise considerably. This already happened last week, but continued this week. Shortages in France, but also other destinations in Southern Europe, pushed prices up sharply. At the end of the week the price rose to close to €50 per 100 liters. In France, prices were even recorded at €54 per kilo, at lower French contents.

The price of cream also rose further, while price developments for skimmed milk concentrate stagnated. Buyers will have been happy with that.

Many parties in the liquid dairy market did not anticipate that the raw milk price would rise as quickly as it did this week. And because it surprised them and they don't really know the causes, they wonder whether the development will be continued next week or not. In the event that large processors release additional volumes for the spot market, the price increase may quickly end. On the other hand, there are also real shortages of fresh produce in Southern Europe, because the drought has hit hard.