Analysis dairy business
Dairy market is moving away from payment prices
Dairy prices are not doing really well. Once again there was another week with falling prices. On the liquid market, this is due to an increasing influx of product, which is also difficult to process. Concentrate in particular took a hit. Behind this, as with solid dairy, there is weak demand. It doesn't all seem structural. There may also be some effect from a temporary Easter dip.
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There is still more than two weeks to go until Easter, but many processing companies have already completed a large part of their purchases. This seems to have an effect on the market, but many companies continue to purchase cautiously and seem afraid to stock up on larger quantities. This phenomenon seems to play a role in the butter and cheese markets, among other things.
Here, purchasing parties do not appear to have very large inventories, while producers do not have a mountain of product either. At first glance there is not much reason to lower or increase prices significantly. It just depends on which factor ultimately decides which way things will ultimately go.
The butter market looks the most relaxed. There is some pressure on prices, but with the current price of cream, excellent butter can be made, while there is no reason for producers to make a lot of butter that then disappears into the stock.
A number of large trading companies indicate that more exports are taking place at the current price level. Even more could be exported if dairies would just pulverize a little extra product, it says. The reasoning is that this will create air in the market and create room for better prices in the longer term. But apparently processors are somewhat reluctant and a fairly high processing margin is maintained.
However, the sharp drop in the price for skimmed milk concentrate this week (-13,4%) should open the door to powdering more product.
With a concentrate price of €1.600 per tonne and a processing margin of €600 per tonne, excellent milk powder can be made, according to market experts. In recent weeks, however, things have become a little more difficult. Back then, skimmed milk concentrate was much more expensive. However, due to the failure of a number of powder towers, there has been noticeably more pressure on the market.
In the case of milk powders, despite the difficult market, there is still more movement in the sale of product for human use than for animal feed.
The market has been quiet there for months, while the situation is not yet improving. Skimmed milk powder for animal feed and also whey powder for animal feed are falling further and further in price. Trade has therefore almost completely come to a standstill.
After all, spot milk for raw milk is also under further pressure, with the price difference with the dairy industry's payment prices increasing.