Analysis milk
Milk fat market not yet succumbing to counter pressure
The liquid dairy market was this week the playing field of mainly the trade in cream and related products. With the help of cheap supplies from Eastern Europe there was a lot of pressure to get the prices down. This succeeded to a limited extent, mainly because producers in Western Europe did not follow.
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In fact, milk fat prices fell more last week than this week, although during the week cream was traded for prices below €8.000 per tonne and butter up to €6.800 per tonne. These were the outliers, however.
The cheap supply is still too limited to keep the market going. The total market for milk fat remains tight and buyers remain short-covered. They have no stocks to lean on, and the producers know that. In France and Italy, cream and butter remain even more expensive than in the Netherlands and Belgium, in Germany the picture is somewhat more divided.
The market for skimmed milk concentrate is almost boring. Prices hardly move and there is no real competition for product. Concentrate is not cheap enough to make full milk powder and it is not very popular for other purposes. In the meantime, traders are missing the cheap supply from France, which is normally starting to enter the market. French concentrate costs around €1.900 per tonne, Dutch product just under €2.100. This makes the price difference too small to bring elsewhere. This is because the French milk supply has so far lagged far behind other years. If this does not change in the coming weeks, this could have a major impact on the dairy market this year.
There is also not much movement on the spot market for raw milk. There is slowly a bit more supply in the Netherlands, Belgium and Germany, but the market can handle that just fine and now that the foot and mouth panic has gradually disappeared into the background, the German dairy industry and market are also becoming more balanced again.
The markets for milk powders and cheese remain fairly stable. Skimmed milk powder is slightly more in demand and is trading a fraction higher, as is foil cheese, while mozzarella and cheddar feel a bit weaker.