Analysis Milk
DCA Spot Milk Price back in line with Guaranteed Price
The DCA quotation for Dutch spot milk has been above the level of the payout prices since mid-July. Now that Christmas is fast approaching, there is little left of the premium that buyers were willing to pay for spot milk all that time. The quotations for cream and skimmed milk concentrate also showed a decrease this week.
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The price decreases on the liquid dairy market are not very surprising. The holidays fall in the middle of the week this year, which is logistically very unfavourable. It is also noticeable that the liquid supply is increasing again, now that the milk supply in North-Western Europe is seasonally on the rise again.
Spot milk equal to guaranteed price
The quotation of Dutch spot milk already fell below the €60 threshold last week and this week it has fallen further to €57,50 per 100 kilos. This is almost completely in line with the guaranteed price of FrieslandCampina in December and also close to the milk prices at other processors. However, spot milk prices are likely to fall further in the coming weeks below payout prices, which appear to be at their peak.
It is unlikely that milk prices will continue to rise in the new year, as was the trend for most of 2024. The dairy market is under considerable pressure. The butter market in particular (and to a lesser extent the cheese market) is having to make significant concessions this week. This is putting considerable pressure on the raw material value of milk. The combination of more milk and weaker sales in the first quarter is not doing the sentiment in the market any good. As long as the decline in the coming weeks is not too sharp, this will not pose a major threat to the payout prices in 2025. This was different two years ago, when milk prices crashed sharply after the turn of the year. Such a scenario does not seem to be on the horizon for the time being. In view of the sky-high manure prices is that a somewhat reassuring thought for Dutch dairy farmers?
Room under €10.000 per ton
The pressure on butter prices pushes the DCA cream quotation back to €9.800 per tonne. This puts an end to prices above the €10.000 per tonne threshold after four weeks, a level that had never been reached in the past. For the broken weeks at the end of December, cream prices of €9.500 per tonne are being mentioned in the market. Skimmed milk concentrate is also not escaping the price pressure and is falling below €2.200 per tonne this week.