Milk fat bomb disrupts liquid dairy market

During the first part of the week, the milk fat price seemed to fall even further than it has now, but some recovery occurred in the second half of the week.

Eastern European surprise
According to various market parties, the butter price was further depressed by the sudden arrival of cheap Polish and Lithuanian products on the market, in addition to products from third countries entering the EU. Due to the surprise effect of the former, the butter price briefly dropped below €6.800 per tonne, but the level is now well above €7.000 again.

In total, the DCA listing fell by 2,9%. It was striking that the cream listing suffered a slightly harder blow, because it fell by 3,9%. In the meantime, the market has recovered somewhat from the shock and the price of milk fat seems to be stabilizing.

Meanwhile, things are quieter on the protein side. Skimmed milk concentrate is trading a fraction higher at DCA, but overall the market was stable this week.

The sounds are also that parties are going to produce a bit more milk powder, although the milk powder market does not give much reason for that at first sight. Export of product to outside the EU without a reassuring health certificate (not from Germany or not from a restricted area) is even downright difficult.

Raw milk has dropped slightly in price in the Netherlands. In Germany, the price remained more stable. The supply was well absorbed and there are few signs that this will change soon. In general, the spot milk price is moving at a few euros below the average payout price.

Liquid whey remains in high demand and relatively expensive. This is not because the calf sector is strongly attracted to it, because from there the demand is actually a bit weaker. The demand for highly concentrated whey products remains, which makes the liquid concentrate expensive. The higher whey protein concentrates and isolates yield 15 to 20 times as much in the market as whey concentrate, and this situation seems set to continue for a while.

In this way, whey increasingly contributes to the milk valorisation in the cheese chain. For the animal feed industry, this could be annoying in the long term, because it becomes increasingly unattractive to produce regular feed whey powder.

The cheese market itself is picking up in the meantime, after a few weaker weeks that were marked by concerns about foot-and-mouth disease (FMD). Not that buyers are very keen to pay higher cheese prices, but the manufacturers are relatively relaxed in the competition, it is said. There are hardly any stocks and the product is selling well.