Vague threat of FMD grips dairy market

In the past few days, a kind of two-price system was already noticeable. Raw milk and skimmed milk concentrate from the Netherlands, Belgium and France fetched higher prices than the same products from Germany. The same applies to cream, but due to a general shortage on the market, there is much less difference to be noticed. 

From a market-technical perspective, it is also very easy to explain, because the Dutch, Belgian and French factories in most cases closed the door to German milk and concentrate. This is because the German animal disease status had already changed due to that one infection on a buffalo farm and this has major consequences for the exportability of dairy from Germany. German dairy is no longer welcome outside Europe. For the dairy trade, it was a week of many logistical and bureaucratic concerns, and ensuring that all the product still found a good destination somewhere.

Skimmed milk concentrate became €100 to €150 per ton dry matter more expensive in the Netherlands, Belgium and also France than in Germany. The FMD threat had little effect on the price of skimmed milk powder.

German companies nevertheless tried to make less powder and still sell as much dairy as possible in liquid form, or to make more cheese. Where that did not work, more product was put in stock.

For butter, this is not a big problem for the time being, because there are hardly any stocks of that product anymore and that is not very desirable. The only problem is the considerable capital tie-up involved in stocking butter. The price of butter remains fairly stable in the meantime.

Foil cheese and mozzarella more expensive
On the cheese market this week, there was further recovery, especially for foil cheese and mozzarella. Mozzarella had fallen well below €4.000 per tonne for a while at the end of last year. In recent weeks, the price has moved up again, including this week.

Further recovery may not be possible for a while. Certainly not if more FMD infections follow from East Germany. The large German cheese production will then have to be sold entirely within Europe, and will then put pressure on the profitability of the remaining cheese production in Europe, because that too has to sell a lot of product within the EU.

Price drop whey concentrate
Another liquid product that took a hit this week is whey concentrate. The price of this fell by about a third, which is a huge drop considering the level of the price in recent weeks. According to market experts, the cause is the weaker demand for more expensive whey ingredients - not FMD, but it is a rather unexpected development.

Moreover, one that will hurt the cheese producers, because the expensive whey supplemented the yield of the cheese processing considerably in the past period. However, the price of whey concentrate is now much more in line with that of regular whey powder.

Everyone in the dairy sector is now hoping that the FMD will not develop into an epidemic and turn the market upside down. That is not an unthinkable scenario, however unforeseen. The coming week will therefore be another exciting week, in which we can only hope that the problems will blow over.