Analysis dairy business
Milk supply decreases, cheese production increases
Although the milk supply in the Netherlands has been under pressure since September, cheese production is actually increasing. This indicates that processors are processing more milk into cheese. And given the rapidly increasing market movements, this is certainly not illogical.
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Recently released figures from RVO show that cheese production in September amounted to 76.186 tons. This is an increase of just under 1,5% compared to the same period last year. This increase is remarkable at first glance, because the milk supply decreased that month actually saw a decrease year-on-year. The conclusion is that since the end of the summer period, proportionately more milk goes into the cheese bin. After all, the production of butter and skimmed milk powder was under pressure in September. These developments are in line with the market noise of recent weeks, but have now also been confirmed in black and white.
Cheese rally
The increasing cheese production is not illogical. Cheese prices have been on the rise since September and the rally is still going on in mid-November. In the meantime, the quotations of Gouda and Edam have already passed the psychological limit of €4.000 per tonne. Historically, these are high cheese prices that have not often been achieved in the past. Mozzarella and cheddar prices are also increasing, but are still marked up compared to foil cheese. Whey powder prices have also accelerated in recent weeks. That completed the good valorization picture.
Of all dairy products, cheese is the most solid factor. Supplies are tight and insiders talk about excellent sales opportunities. Both to retail and food service. Many buyers had waited to hedge and had not seen the upturn coming. Producers often don't either. The fact that milk prices have recently risen again is largely due to good cheese valorization.
2024
In mid-November, the rising cheese market is supported by the approaching festive month. However, the rally appears to be in its final phase. The question is whether the relatively high cheese prices can be maintained in 2024. The first quarter is traditionally weak in terms of sales. Seasonally, milk production increases and with it cheese production. Stocks are currently low, but producers are often not completely confident.