Small gains return to the dairy market

These increases are visible in various areas: in skimmed milk concentrate, cream, and flat whey powders. They haven't shaken the market, but it's also notable that the prices for butter and foil cheese have remained stable this week.

Further price drops are being recorded for cheddar and mozzarella. The DCA price of cheddar curd is falling the most, dropping by almost 4%. Meanwhile, cheese sales to the consumer market are continuing well, according to sales data, although supermarkets are not rushing to start offering special offers on cheese.

Milk powder is still struggling, although prices have been low enough for exports for several weeks now. The price for skimmed milk powder has dropped by another 2%, while that for whole milk powder has fallen by around 4%.

How this is possible is easy to explain. The skim milk powder market is suffering from internal competition within the industry, as often happens in times of a large surplus of concentrate.

Competition
The supply of conventional producers is being undermined by parties who have purchased skimmed milk concentrate at low prices from these same dairies. These companies were unable or unwilling to process part of their supply themselves. The concentrate was purchased for prices between €1.100 and €1.300 per ton, then dried in a rented tower, and can then be marketed at a much lower price than conventional producers can.

The drop in the price of whole milk powder is mainly due to the sharp decline in the value of milk fat. Now that it's much cheaper, whole milk powder can also be offered more cheaply.

Compared to New Zealand, for example, Europe remains quite cheap with butter, but the American supply is still lower priced.

Bargains
For true bargain hunters, it's interesting to know that on the American CBoT futures market this week, spot butter (futures, but physical) was even offered for the equivalent of €3.000 per tonne. However, not in very large volumes.

While the butter price remains stable, the DCA cream price rose by a few percent this week. Demand is apparently quite healthy. The price for the aforementioned skimmed milk concentrate performed even better, with a 3% increase. The surplus of this product is gradually decreasing, and this is affecting the entire market. Meanwhile, the spot market for raw milk remains somewhat sluggish, but is not declining significantly. However, compared to the average payout price, the spot milk price is much lower.