Analysis milk
Dairy market continues to decline, bottom not yet reached
The dairy market has seen another week with all commodity prices plummeting. It's tough for producers and suppliers of products, as significant value is being lost, and those who thought they were cashing in last week are finding this week they bought too much. Yet, some are also taking advantage of the situation.
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Buyers, however, remain somewhat hesitant. While some exports have resumed, the exchange rate still makes it difficult to sell products on the global market. There is, and continues to be, plenty of competitive products on offer.
Although milk powder traders believe there's some movement in the market again, while that wasn't the case for a long time, the milk powder market is still the quietest this week. Prices for milk and whey powders are all falling. Moreover, the price for skimmed milk powder food is increasingly approaching the psychological threshold of €2.000 per tonne of product.
Intervention
Producers are paying a significant premium on this price (but not buyers and dryers of cheap concentrate). On the other hand, this price isn't a record low, to put things into perspective. For example, the price is still almost €400 above the old intervention threshold. However, it's a price that hasn't been this low in a long time, and that's a consequence of the abundant product supply worldwide.
On the liquid dairy market, spot milk prices are falling slightly again this week, after a brief, slight recovery. However, the price of skimmed milk concentrate has fallen sharply. In one week, it dropped by 14% to €1.185 per tonne. For a short time, France was even offering product for about half this price, but the concentrate price is now recovering somewhat.
The price of cream has also fallen again, but less sharply than that of butter. This was expected by some, but not at all by others. The pressure on butter prices this time seems to be triggered less by cheap supplies from outside the EU or signals about disappointing German retail contracts, but by low-priced products from within the EU itself. For example, Danish and Irish butter.
Irish and Danish Butter
While butter prices fell by around 5% this week, remaining just above €5.000 per tonne, Irish butter is already being offered at prices around €4.600 per tonne, and even slightly lower, for the first few months of the new year.
The situation on the cheese market isn't much different. The cheddar price is relatively least under pressure. The DCA price remains well above €3.500 per tonne. This may also be because even cheaper American product is already in transit but not yet available in the EU. Incidentally, it doesn't appear to involve large quantities or very high-quality product, but the psychological impact could still significantly impact the market.
Mozzarella prices are also continuing to fall slightly, but this product was already regularly offered for prices below €3.000 per tonne. Gouda and Edam foil cheeses saw the largest price drops, reaching prices below €3.000 per tonne for the first time in a long time. This will undoubtedly hit the already sharply declining milk prices even harder in the coming weeks. Producers can no longer afford the current price they are paying.