Liquid dairy provides counter-resistance to declining market

The spot milk price is again fluctuating around €60 per 100 kilos, the cream price is just below €10.000 per tonne.

These are yields that justify a continued solid milk price for the farmer, even if the price for skimmed milk concentrate drops slightly. The question is: for how long will the dairy market continue to support the dairy farmer? 

Much depends on the development of purchasing power among consumers, and on the real recovery of milk production. The trough in supply may have passed and the fat and protein levels in milk are increasing, but a real recovery of supply has not yet occurred.

In addition, expensive spot milk and expensive cream alone cannot ensure a permanently high payout price for milk.

The cheese and butter prices should also not come under further pressure. That is not the case yet. In cheese, Cheddar is a good price-sustaining product, but for the Dutch farmer it is more important that Gouda and Edam cheeses remain price-sustaining and that the butter price is not pushed down any further. That trend must first turn, but it is not certain whether and if so, when that will happen.

The powder market does not seem to help the milk price at all, at least not the market for simple dairy powders. Skimmed milk powder has been a difficult product to sell for over a year now and after a period with a more demanding market, the whey powder market is also slightly declining.

Partly because of this, the question remains as to how long the dairy industry can continue to pay rising milk prices.