Analysis milk
More pressure on dairy market, spot milk spared
While the spot market for raw milk has been virtually stable for weeks, there is slowly but surely more pressure on other dairy prices. These are not major movements, as sometimes happens in other years when the annual peak in milk supply falls late. And the approaching Easter period may also play a role. Nevertheless, the dairy market has continued to behave unusually this year so far.
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This can also be seen in the new Guaranteed Price that FrieslandCampina announced for April. Dairy prices fluctuate here and there, but remain at a high level and the industry is doing well. A small side note is that there is not much to say about the margins yet and dairy companies are pulling out all the stops to bind farmers to them
The average payout price of the dairy industry has been slightly higher than the spot milk price since early December last year, but not by much. That also points to a fairly stable situation, but there is a tight supply of dairy. The data on milk supply also speak clearly.
The volumes traded on the spot market for raw milk and on the market for milk concentrate and cream are usually limited. Processors like to keep the milk they have in their own hands and try to process it. In fact, larger volumes only come onto the market in the event of calamities and maintenance.
If you look at the spot market, you will see a clear difference between the Dutch (and Belgian) spot milk price and the German spot milk price. This is still a consequence of the suspicion of FMD around New Year's Eve near Berlin. There was no real contamination, but the trade effects were great. So great that German milk and dairy products are still not welcome everywhere.
In comparison, the FMD outbreaks in Hungary and Slovakia have had surprisingly little impact on agricultural markets so far.
Prices of cream and skimmed milk concentrate fell a little further this week. The concentrate price in particular weakened relatively more (by over 3%), but with a price of €1.870 per tonne of dry matter this price is still not low for the time of year.
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The prices of cream and butter still offer strong resistance to real price decreases. The futures market hardly seems to be a reliable indicator for the price development for the latter product. It does not alter the fact that the price is slowly decreasing somewhat.
The milk powder market continues to behave most stable, although the quotation for skimmed milk powder feed did experience a slight price drop.
This is partly due to the fact that the whey concentrate price has come under increasing pressure due to increasing supply.