China is no longer the largest buyer of milk powder

The DCA quotation for skimmed milk powder has recently fluctuated around the rate of €2.300 per tonne. The worst price pressure seems to have faded into the background, but at the same time little upside potential is visible. On the world market, the dollar differences between Europe, the United States and New Zealand are so small (less than $100 per tonne) that none of the export blocs has a clear advantage. 

Weak global market
In any case, it is urgent for exporters to be able to serve the overseas markets, because demand is weak. It is striking that China has disappeared from the top 3 most important sales markets for European milk powder in the first months of 2024. Algeria now tops the list, followed by the Philippines and Egypt. On balance, however, European exports are under pressure. At 59.095 tonnes, the European export volume was more than 10% below last year's level.

The weak demand on the world market is bad for exporters, because so is demand within Europe. In contrast to other products such as cheese and butter, the milk and whey powder stocks are on the large side. As a result, powder prices are also valued relatively lower than other products within the dairy range.

Supply volumes
Declining milk supply volumes could relieve pressure on the market in the near future. New Zealand reported a significant year-on-year decline in the tail end of the milking season. Volumes are also lower in the United States and Europe, although supply here is working towards the seasonal peak. Perhaps that is why futures prices on the EEX have recently picked up again, because the impulses are certainly not coming from the demand side of the market.