Analysis milk
DCA dairy prices set to miss record low
The dairy market is moving swiftly towards the quiet end of the year period. Next week and the week after that, many companies (and offices) are operating at half capacity. This means that the dairy trade is also more difficult, although cows will of course continue to supply milk. Such a period is accompanied by price drops, especially in the liquid segment. However, no record low is expected this year.
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It is not difficult to identify the cause. Despite all the movement in the market, there is still no surplus of milk. In the past week, somewhat larger volumes of milk and semi-finished products did come onto the market, but what did come was also quickly absorbed. At a slightly lower price, but in fact all raw milk was still sold above €40 per 100 kilos and often well above that.
Spot prices of €10,00 or €15,00 per 100 kilos, as was often the case 'in the past', are not to be expected now. The prices of skimmed milk concentrate and cream will not 'go down the drain' either. For the bargain hunters who are used to making a few nice deals around Christmas and New Year's Eve, that is a pity, but politics has ensured that such things will probably become part of folklore.
It is significant that this week the prices for products such as cream and also butter have fallen much less than last week. At the GDT auction earlier this week, European butter was even sold more expensively than two weeks earlier.
For milk powders and cheeses, most prices are falling slightly, but not in all cases. Mozzarella did fall in price, but at the GDT auction this product also became more expensive for some suppliers. Unfortunately, this cannot yet be shown in the accompanying graph, because it contains the average of several suppliers.
The quotations for whey powder are increasing slightly for the second week in a row. This is somewhat related to the continuing very high prices for liquid whey concentrate, but there is no direct link. The whey concentrate is expensive because of the strong demand for high-quality whey powders (WPC80, WPIs). The concentrate is too expensive to make regular whey powder from it. Indirectly, this of course cleans up the market for regular whey powders.
What all this says about the dairy market after the turn of the year is still difficult to say, but a further price drop is certainly not automatic. The signals from the market are too different for that. Dairy farmers can expect lower milk prices than now, but that is mainly a consequence of previous price drops for cheese and milk fat, among other things.