Analysis Milk
Calm dairy market as the holiday season approaches
The liquid dairy market can look back on a quiet week without too many interesting facts. With the summer holidays ahead, there is less demand from the fresh segment, which is also due to the lack of convincing summer weather. The Southern European countries are also not (yet) really on the market.
Read this article?
Become a subscriber and get instant access
Choose the subscription that suits you
Broadly speaking, liquid dairy prices are moving sideways. DCA's room listing is even a step in the right direction, which is a fairly unusual change in this usually dynamic market. The increase that was visible in recent weeks has now come to an end. The biggest cause of this is the lack of demand. In addition, the butter market is moving downwards again, something that also contributes to the weakening movement. Cream was already quite expensive to make butter from it profitably.
Few surpluses
In addition to the lack of demand, the availability of liquid dairy is quite good. Better than expected even. This is due to the favorable weather from a milk production perspective. Current temperatures are close to perfect conditions for this time of year, you could say. This is also evident from ZMB's weekly German milk supply figures, which are more than 1% higher compared to last year, while the number of dairy cows has shrunk. Many German and Dutch processors have a balance between supply and production, which means there are currently relatively few surpluses.
This makes it likely that skimmed milk concentrate prices will move upward again this week, without support from the milk powder market, which is even persistently weak. The surpluses from France are also better than expected or disappointing. The latter from the buyer's perspective.
Spot milk quotation takes a step back
After four weeks of rising prices, the Dutch spot milk quotation will take a step back this week to €46 per 100 kilos. This level is not far from the base payout prices, which are still rising in mid-July (among the processors that have published so far). However, the upward force appears to be weakening somewhat now that the dairy market is entering the generally calm summer period. There is usually more demand for liquid dairy from countries in Southern Europe, such as Italy. But at the moment, buyers from these countries are still keeping calm, because the supply there is also in order.