Breathing space on liquid dairy market, no rest

It is a breather in a liquid market that is at a historically high level. For buyers, sellers and intermediaries, the high prices feel unfamiliar and the question is strong about where the prices should go next. There is no rest in the market because of that.

Despite the high prices, the supply and demand situation has not really changed. Milk supply is decreasing, product availability is low and demand for dairy remains.

It is heard that the retail sector in particular has little interest in paying the sharply increased prices. There is resistance, but the question is also what the alternative is. In New Zealand and also in the United States, various dairy prices are a lot lower, but that does not mean that there is a cheaper product available here. In all of North-Western Europe, the milk supply is declining and even in Poland.

Liquid product is definitely very difficult to import from far away, but even a good transportable product like butter cannot simply be imported from a relatively cheap region, say New Zealand, even though there is a gross price difference of around €1.700 per tonne and according to traders a net difference of around €600. Importing is also time-consuming.

The alternative of bringing more milk here does not seem to be an alternative, because there is not much milk to be found anywhere in the wide area. Anyone who wants freely available Dutch spot milk in the Netherlands pays between €63 and €67 per 100 kilos. In Germany the prices are lower, but German milk cannot be used for every product.

Cream is being paid for slightly less money this week than last week. With prices of almost €10.000 per tonne and sometimes more, a kind of upper limit seems to have been reached.

Skimmed milk concentrate is also cheaper this week than last week. At that time, the price of concentrate was so high that several milk powder producers decided not to powder their raw material after all, but simply to sell it. The extra supply of concentrate caused the price to drop. The price of whey concentrate has barely risen in the meantime, but whey powder is still rising in price.

However, it is not expected that the prices for liquid dairy will really fall in the near future. Not only does the supply remain too small, the rising cheese and milk powder prices also do not give cause for this. This does not rule out that a correction will occur at some point, but then it will happen from the demand side and not from the supply side.