Liquid dairy products quickly become more expensive after the holidays

The festive weeks were not entirely without problems for the dairy industry. Because, as is often the case, there were a few disruptions to be resolved. Including one quite serious one. As a result, a large pool of milk had to quickly find another home, which was accompanied by short-term lower prices.

For the dairy farming sector, the strong recovery is welcome news, because it provides a solid base for the market. However, it should be taken into account that the cheese price had already fallen considerably before Christmas, while the milk powder market remained consistently weak.

Spot milk price again towards payout price
The current DCA spot milk price for the Netherlands is €52,50 per 100 kilos, slightly below the basic milk price for January at Arla, A-ware and FrieslandCampina, among others, but will rise again. 

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In the Netherlands, the spot milk price remained at a better level than in Germany.

The prices of skimmed milk concentrate and cream also increased by leaps and bounds in the new year. Skimmed milk concentrate rose by 12,4% in price compared to the last price in the new year, the price of cream went up by more than 7,9%.

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This means that these prices are not yet back to the record levels of last year, but they are rising unexpectedly quickly and strongly. The question is whether this will continue if the milk supply increases seasonally in the coming months.

Liquid too expensive for solid
The high concentrate price also slows down the production of skimmed milk powder, because the price of milk powder increases only slightly and is not high enough to make large-scale drying of skimmed milk concentrate profitable.

The increase in the price of cream is less of a problem for now, because the price of cream is still below the so-called butter equivalent. That is to say: at the current price of cream it is still profitable to make butter from it.

Expensive whey not too expensive
The same problem that occurs with skimmed milk concentrate and skimmed milk powder occurs with whey concentrate and whey powder. The price of whey concentrate has increased significantly in December and is now considerably higher than the price of standard feed whey powder. This is due to strong demand from the ingredients industry, where whey powder concentrates and isolates are still selling for ten times or more the price of whey concentrate.

Dairy value
Despite the higher prices for liquid products, the valuation of the total dairy package is still lower than in the autumn months of 2024.

This is mainly due to the lower prices for butter, cream and especially cheese. In the graph above, an attempt has been made to show this using the German 'raw material value' based on skimmed milk powder and butter and the more or less average milk prices of FrieslandCampina and A-ware. For the Dutch situation, the raw material value should still be more than €1 higher.

The cheese prices, which are heavily included in the milk price, are slowly recovering. The strongest recovery can be seen in mozzarella, but that product also suffered the hardest blows in terms of price at the end of last year.

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Milk powder prices appear to be rebounding slightly, but ultimately still struggle to really move off their perch because demand is too weak.