Milk fat continues to float on slightly declining market

The biggest faller this week is the price of skimmed milk concentrate. It fell by 4,5%, breaking a five-week period of sharply rising prices. Incidentally, the fall is not due to an oversupply of concentrate. In fact, there is less and less freely available. The main cause is that concentrate has become too expensive, certainly in an environment in which the price of skimmed milk powder is again being pushed downwards. The processing margin has become too tight.

Part of the concentrate also still goes to Southern Europe. Also, quite a lot of raw milk is currently going to Italy in particular. As a result, spot milk prices in the south of Germany are increasing even more. According to reports, up to 67 cents per kilo is paid for raw milk in Italy. In the case of export to this country, however, a large part of that price is spent on transport costs.

In the Netherlands and northern Germany, the price of raw milk continues to rise. Several factories feel compelled to buy more, because their own supply is lagging behind the planning and deliveries have to be made.

The strongest increase this week is the cream quotation. Not so much in percentages, but in absolute amounts. The DCA quotation has come out at €8.800 per ton of dry matter. That is not a record, but it is a high price for this time of year. The butter quotation has also risen slightly, but only minimally.

The lower listing for skimmed milk powder is a disappointment for many companies. There had been hopes for an improvement in the market, but this week's GDT auction and Europe's weak export position meant that this did not happen. As a result, several producers in Europe are now putting considerable quantities of skimmed powder on the market, mainly to get rid of older stocks. It is said that quite a lot of product has been put on the market for prices below €2.300 per tonne.

The listing for 'flat' whey powder (ordinary whey powder food or feed) is also under pressure. The animal feed industry buys little, mainly because few young calves have been set up. And here too, export is not going well.

Finally, the cheese market is also experiencing pressure, across the board. Mozzarella, which was even slightly more expensive than foil cheese for a short while, has fallen back to a more normal listing. The listing for foil cheese itself is also slightly lower, although there are still not many stocks. Cheddar also continues to list weakly. It is also striking that there has been increasing pressure on the listing for natural cheese in recent weeks. Apparently, slightly too much has been produced in recent months, and now some pressure needs to be released.

The movement in the market is annoying for the dairy industry, because it has to continue to pay relatively high prices to suppliers, but the processing margin is now under further pressure.