The milk powder market knows what it means to rise again

It is not so much an excessive supply, but mainly a lack of demand that has plagued the market since mid-November. The DCA quotation of skimmed milk powder recently lost more than €200 per tonne. It was striking that the Algerian purchasing organization Onil issued several tenders in recent months, but that did little to change the weak sentiment in Europe.

The Algerian purchasing needs were probably reinforced by a fire in their storage capacity on December 31, which had room for 10.000 to 12.000 tons of milk powder. It is not known how much product was lost due to the fire. In any case, the Algerian question is what milk powder sales will depend on. Internal European demand is described as weak, as is Chinese demand.

Valorization
At the same time, milk powder production is not excessive. For example, in November, European production of skimmed milk powder amounted to 85.000 tonnes, compared to 95.000 tonnes in the same month a year earlier. The Netherlands is one of the shrinking countries. In 2023, 84.225 tonnes were produced in our country, a decrease of 3,2% compared to a year earlier, according to figures from RVO. Cheese gave better valorisation last year, resulting in more milk going into the cheese bin.

The roles have now been reversed and the combination of butter and skimmed milk powder is more profitable. This may cause more milk to be powdered. At the same time, the price of skimmed milk concentrate on the spot market is too high to dry profitably, although the situation has become less critical in the past week. 

Global market
The competitive position of European milk powder has improved on the world market, due to the strong gains on the Global Dairy Trade. This offers room for a continuation of the price recovery that has started, although further room for increase appears limited for the time being.