Milk powder is a driving force in the solid dairy market

The trough in milk supplies in Northwestern Europe is no longer far away and this is noticeable in the market. Supply is scarce on the liquid dairy market and trading volumes are therefore thin. For example, a planned factory shutdown at a large cheese maker did not suddenly cause pressure, while otherwise it often leads to price pressure. The high prices for cream and skimmed cream concentrate deprive butter and powder producers of their purchasing desire. They only buy when necessary to meet delivery obligations. There are also some production lines at a standstill waiting for times when cream can be profitably converted into butter again. It is also likely that less powdering takes place.

Despite the drop in demand, the liquid market remains steady. Cream and lean concentrate have even increased somewhat this week, although the increases are not comparable to the previous weeks. Yet this is surprising, because you can assume that a major correction will soon take place in the liquid segment when milk supply picks up again. Prices are currently being kept in check by good demand from the fresh segment. It is noticeable that Christmas production is slowly getting back on track. Yet a turnaround is not far away. In other years it had often already been used.

Price-increasing powder game
The permanent dairy market is also broadly improving, supported by the higher Global Dairy Trade earlier this week. The skimmed milk powder quotation is well on its way to €2.500 per tonne. The price-increasing game in the market is mainly played by producers and trading houses that are strongly committed to higher prices. End customers are not always willing to respond. Export demand also no longer fits these levels. At the same time, stocks have also decreased somewhat in recent weeks, although producers and trading houses have certainly not sold out yet. The question is therefore whether the price increase will continue or whether the market will level off.

Foil cheese has never been this expensive this year
This also applies to cheese, where prices are also increasing. Gouda foil cheese was so expensive even earlier this year, with prices briefly above €3.700 per tonne. Edammer is just below that. The upward prices also explain why milk prices for October often do not drop further. Cheddar and mozzarella are having difficulty continuing their upward trajectory, due to a large supply from Ireland. The price of butter also continues to rise unexpectedly to €4.780 per tonne. This is the highest level since February. The explanation is that butter can benefit somewhat from high cream prices, although there are sufficient stocks on the European continent. Also from Irish producers who have brought supplies to the Netherlands. This would be cheaper than in your own country.

Anuga
Starting next Saturday, the European dairy trade will meet for a few days at the Anuga fair in Cologne. Buyers and sellers will meet here for deliveries in the remainder of 2023 and the new year. In the run-up to the stock exchange, sentiment in the market is unexpectedly stable, but according to insiders this can easily change again.