Thick milk vortex and Easter put pressure on the dairy market

What happens on the market is not good for the payment capacity of the dairy companies. This is clearly visible in a comparison between factory prices, the spot milk price and the development of the raw material value. The differences are increasing. 

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The above comparison does not say everything, because the share of added value products is not reflected in the raw material price, but it is nevertheless an important indicator.

The price drops do not have to be solely negative. This may be a reason for buyers to make a move soon, because relatively speaking, prices are now quite low and, for example, milk powders have reached world market levels. It also brings export opportunities and the possibility to get rid of excess stocks, which gives room, albeit at a loss.

On the Global Dairy Trade earlier this week, the quotation for skimmed milk powder fell, but milk powder prices here fell even further.

Cheap concentrate
Although powder prices have already fallen sharply, even cheaper products may come onto the market thanks to the dairy industry itself. This is because extra cheap skimmed milk concentrate is currently being marketed. Not from the Netherlands, but from France and Germany. This product costs so little that after processing into milk powder it can still be offered well below the current market price. Concentrate (fat milk) and powder are causing a vortex in the market. 

This happens more often in the spring period with a temporary abundance of milk. Many smaller factories in France and sometimes Germany cannot produce powder themselves and have no choice but to dispose of excess concentrate at dumping prices.
The price of cream also continues to fall, but by 3% and not by 7%, as with skimmed milk concentrate. The price of butter is falling, but at a slower pace. Actually, the butter price is still holding up quite well. It helps that cheap Irish and Polish offerings are still only available on a sparse basis. The DCA butter quotation is only 1% lower, which tends to stabilize. 

Pressure on cheese prices 
This is comparable to the price drop for Gouda foil cheese. Mozzarella is having a slightly more difficult time and has dropped about 2% in price. As a whole, the cheese market continues to offer a remarkable degree of resistance to downward price pressure. Even despite the fact that a relatively large amount of cheese is produced. Consumption apparently also remains at a good level.

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The coming weeks will tell us whether cheese prices can maintain their level, or whether increasing milk supplies will cause further downward movement in the market.