Milk powder market could use some pepper

Is it a lack of demand, or is it the ample inventories that are hindering the powder market? It's probably a combination of both. In any case, not a lot of skimmed milk powder is produced. At 6.375 tonnes, January production was the lowest since 2019. Looking at the whole of 2023, more than 3% less was produced in our country. A decline is also visible across Europe.

With a decreased milk supply, cheese production remained virtually the same in January. Cheese is therefore what processors with flexible production capacity focus most on. This is to achieve the best valorisation of milk. This means that a lot of whey powder is also released, but RVO does not provide production figures for this.

Prices down
Meanwhile, skimmed milk powder quotations have fallen back to €2.400 per tonne, or even lower. Whey powder prices are also under considerable pressure. This will make European products somewhat more competitive on the world market, as American prices will remain at a reasonable level at the beginning of 2024. On the other hand, price pressure is visible on the Global Dairy Trade, just like in Europe. At the end of 2023, European products were the most expensive, but price differences on the world market have now virtually disappeared. 

Looking at sales on the world market, they are under some pressure. In the last three months of 2023, sales were below the level of 2022. At 51.789 tons, sales in December were almost 20% below last year's level. European exports will increase throughout 2023. This is because more product was sold in the first half of the year. China has been purchasing smaller volumes for some time now. This is due to the strong domestic milk production and probably also the faltering economy. On the other hand, Algeria is buying more and has now overtaken China as the largest importer.

Resigned sentiment
For the time being, the weak tone on the milk and whey powder market seems likely to continue for a while. This is in view of the increasing seasonal milk production in Northwestern Europe and the United States and the weak sales according to producers, both in Europe and beyond. In addition, there are also many stocks with a fairly high production age hanging above the market. According to an insider, the milk powder market could use some pepper to counteract the resigned sentiment.