Weak milk powder market is riding the dairy rally

Since then, sentiment on the dairy market has clearly changed. The realization that milk production could be disappointing in the second half of this year is increasingly becoming apparent in the market. Not least for customers who often have short coverage. Now that the market is turning, large end customers are often rushing into action. This gives the market extra power. 

Stocks by age
The term rally mainly applies to the butter market, where supplies are very tight. The cheese stocks are also not too large, which has also set the market in motion. The milk powder market is characterized by ample(er) stocks, and according to insiders there are also enough consignments that are sometimes already a year old, but that does not prevent a revival. The prices of skimmed milk powder are now approaching €2.500 per tonne again, although quotations are often still slightly behind.

Nevertheless, the DCA quotation is back at the highest level since February. In the past week, this quotation increased by more than €100 per tonne. The last time such a large price increase was announced was last summer. Milk powder prices also rose rapidly on the Global Dairy Trade last week, just as price increases are also visible in the United States. Expressed in US dollars, the recovery was fastest in Europe. 

The revival does not continue
The revival on the European milk powder market appears to be short-lived and will not continue convincingly this week. Some doubt has arisen both in the physical market and in the futures market. The EEX in Germany is also taking a step back. The higher prices also immediately stimulate sales interest among trading houses and producers. The relatively high age of various milk powder batches appears to play a role in this. In addition, demand on the world market remains quite weak, mainly due to the Chinese who are holding back.