Dairy market is doing well, but there are concerns about exports

This is a headache for many exporters. The actual loss of the shipping route through the Suez Canal and the Red Sea (due to Houthi shelling) will effectively put a number of important export destinations beyond the reach of European dairy companies. These countries will therefore probably have to look for South American products, for example. In any case, European exporters are confronted with much higher freight rates and uncertainty regarding the delivery of their goods.

This is not yet very clearly reflected in the European quotations for skimmed milk powder, including that of DCA, but it is noticeable that the GDT quotation, with mainly New Zealand product, is priced considerably lower.

The milk powder market as a whole also appears to be suffering slightly more from weaker demand, although this will not apply to every segment. Food companies that want milk powder with higher sustainability characteristics will certainly have to dig deeper into their pockets. The market for whey powder and whey powder derivatives is also slightly under pressure, but is less affected than the milk powder market.

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A slight increase in realized prices can be seen on the butter market. The supermarkets are not the main attraction here at the moment. They keep quiet for a while after the holidays, because they often still have enough stock. Here it is mainly the users of winter butter who drive the market. However, not much trade is taking place there yet.

The price of cream is now recovering from the New Year's Eve dip, but nevertheless remains below butter parity in terms of price. In other words, measured against the price of butter, cream should be more expensive.

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Skimmed milk concentrate also rose in price again this week, relatively speaking more strongly than cream. At a quotation of €2.085 per tonne, it is actually on the expensive side to make milk powder, but concentrate can also be used for other applications.

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The market for raw (spot) milk is also increasing, but remains below the milk valorization price of the IfE in Kiel (the Rohstoffwert) and below the Guaranteed Price/WP A-ware. Especially after correction for levels.

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The best value for milk continues to come from cheese – at least when it comes to bulk dairy/commodities. Contrary to what some feared at the end of last year, the price of cheese is picking up again, especially for foil cheese, but also for many other types of cheese.

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It is still difficult to say whether this trend will continue, but the fact is that cheese stocks remain quite limited and many buyers are not yet provided for the entire first quarter. Even though milk supply will pick up seasonally in the coming weeks, the prospects for the cheese market appear to remain positive for a while.