Analysis dairy business
Low inventories drive up cheese prices
Cheese prices have made significant increases in recent weeks. The market is much firmer in October than insiders had previously estimated. However, the top in the market is increasingly coming into focus.
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Prices for Gouda foil cheese have now passed the level of €3.700 per tonne, according to DCA's quotation. This is the highest level so far in 2023. Edammer is also picking up and - as usual - is slightly lower. The cheddar market is less stable, partly due to a wide supply from Ireland that is holding back the price increase. Mozzarella, on the other hand, can take steps. On paper, cheddar prices are now somewhat undervalued compared to Gouda foil cheese.
Tight supplies
Due to declining milk production in the Netherlands and Northwestern Europe, less cheese is also produced. This is of course nothing new at this time of year, but market parties are viewing the tight stocks with some surprise. Manufacturers are sold out for short-term deliveries, or at least claim to be. German producers in particular speak of extremely low inventories. This indicates that sales volumes to retail and food service are better than previously estimated. There was some skepticism about this, fueled by inflation in Northwestern Europe.
Because butter and milk powder prices are also rising, it is not expected that cheese prices will have to give up profits again soon. All the more so because sentiment on the global market is upward. This is also evident from the Global Dairy Trade, which has shown considerable profits for four auction sessions in a row. At the same time, it is also unlikely that foil cheese prices will rise to €4.000 per tonne. There is probably a lack of conviction in the market for this.