Analysis dairy business
Dairy market suffers from mood swings
The mood on the dairy market has changed considerably in a week. The clearly positive undertone of last week has made way for more expectancy. There are clearly more product prices on a downward trend. Not yet the cheese price, but prices for powders, cream, concentrate, raw milk and especially butter fell.
Read this article?
Become a subscriber and get instant access
Choose the subscription that suits you
The decline in the price of butter was the most striking, but few market participants were really surprised by it. In recent weeks, the price of butter has risen quite rapidly. With this in mind, it is not surprising that a correction will occur from time to time.
With the latest price drop for concentrate, it seems to be gradually becoming worthwhile to produce skimmed milk powder again, although there will be little margin left. The current demand for skimmed milk powder is also weak. If you want to sell real volumes of milk powder, you have to export, but the European product is still on the expensive side to compete on the world market. This certainly applies to anonymous products.
Anyone who produces better quality, for example an instant product or a product from a well-known and popular origin, can still do reasonably good business, but things don't go very smoothly. Payment is difficult for many African destinations and many Asian markets are still difficult to reach due to the problems in the Red Sea.
Only fairly limited exports required
People in the powder trade believe that Europe needs to export relatively little powder to take the pressure off the internal market, because domestic consumption in the EU is relatively high and enough milk is also processed in other market segments. This puts the EU in a somewhat different situation than, for example, New Zealand or the US.