Price recovery in the dairy market turns into a sprint

All prices on the milk powder, butter and cheese market are also rising sharply. Sometimes so much that parties are surprised by it. Yet there is a real growing demand underneath.

Not just emotion
According to various market parties, the improving market is partly emotion-driven, but underlying export figures show that much more dairy has been sold in recent months, especially to Southeast Asia, than many traders could have anticipated. The volume of direct sales appears to be considerably higher than first suspected. The strong demand for cheese, in both the US and Europe, also plays a role, as does the limited availability of dairy and the improved weather.

Price peak soon after supply peak
What is interesting about this is that it all happens shortly after the peak of milk supply, which means that more milk will not really become available later this year, at least not in Europe and the US, it is expected. New Zealand is also entering the winter season and will have little to offer in the coming months.

The spot milk price in the Netherlands and Germany increased by 12 to 13% this week, which is good for the strongest increase in the dairy market. This is happening thanks to an increasing demand and a slightly declining availability of raw milk.

Meanwhile, milk fat and milk concentrate also remain in high demand. In absolute terms, the cream price rose the most, by €550 per tonne, according to the DCA quotation. Butter followed with almost €400. The price for skimmed milk concentrate followed suit, rising slightly less than last week.

The price of cream in particular continues to rise. According to some parties, the price is already approaching €8.000 per tonne or even exceeding it. The price of butter is also blowing a strong tune on the futures market. Before the end of the third quarter or the beginning of the fourth quarter, the price there will already be approaching €7.000 per tonne. This is often too high a price for the export market, but within Europe the market does not yet appear to encounter any barriers.

Best valuation
Due to the sharply increased fat prices, the best value in terms of commodities at the moment is in cream and powder. It helps that the price of milk powder is clearly on the rise again. Skimmed milk powder food is clearly above €2.400 per tonne, whole milk powder above €3.700 and is therefore still undervalued, according to various reports.

Also, according to various reports, relatively little whole milk powder has been produced in Europe in recent months, less than would be needed. However, according to these reports, New Zealand product is also available in Europe to compensate for this.

The price recovery is also making itself felt on the cheese market. It is striking that the price recovery for Gouda (and Edam) foil cheese is going slightly less smoothly than for mozzarella and Cheddar.

The higher prices may not be immediately and unfiltered reflected in higher payment prices for farmers, but it is nevertheless expected that they will certainly benefit from the price recovery in the coming months. The condition is that it does not stop at one or two weeks of higher prices.