Dairy market continues to behave differently according to season

There are of course exceptions, especially with bulk milk powders, but that can change too. The big difference with other years is the lagging milk supply. Not only in the Netherlands, but also in neighbouring countries. There are even factories that say they have difficulty keeping up the supply.

A major cause - more than the weather - is the aftermath of last year's bluetongue epidemic. That has dealt a severe blow to the composition and structure of the livestock population. The strict environmental policy comes in second place.

Surprisingly, the effect of the weak milk supply is not very visible on the spot market for raw milk. Many processors prefer longer-term contracts over occasional purchases, it is said. In addition, the spot market prices are then generally lower than the contract prices. 

The average milk price currently paid in the Netherlands and Northern Germany is between €54 and €56 per 100 kilos. That is more than the spot milk price, and also higher than the Guaranteed Price of FrieslandCampina. But when the pasture premium is added to that, it comes close to the average mentioned.

The music on the liquid dairy market does not come from the raw milk prices. It is again cream and behind it butter that set the tone. The prices for both products rose sharply again this week.
With cream even harder than butter.

The lack of butter supplies has so far also prevented any attempt to bring the price down. Of course, it is always possible that very warm weather and an abundance of grass will suddenly come, but even that will not change everything immediately.

Cheese stocks are also not very large. Some producers even deliver foil cheese that is less than three weeks old. Cheese prices have also gone up considerably in the meantime.

Skimmed milk concentrate remains in fact much too expensive to make milk powder from. That is also done partially. A large part of the product goes to fresh production or other destinations. The market for energy drinks is also growing.

A similar movement is visible in the whey market. Prices are also slightly under pressure there, although high-quality food whey powder is still being exported for more than €1.200 to €1.300 per tonne and whey concentrate continues to contribute well to the valorisation of cheese.

For dairy farmers, this is not all bad news, but for many entrepreneurs it will remain a challenge to increase production.