Positive signals mask dairy weakness

The latter isn't what you'd expect with the Christmas and New Year holidays approaching. Milk fat usually becomes more expensive then. The development of the price of cream meets that expectation, but the butter market as a whole is weakening slightly further.

This is because there's a kind of dichotomy in the butter market. Demand for fresh consumer products is good. Small-package butter from German discounters is selling from around €5.500 per tonne. That's not bad, but that price includes margins for supply chain partners and processing in small packages. At the other end of the spectrum, Irish winter butter is also offered ex-factory for around €4.700 per tonne, and there's product from major European processors starting at €4.800 per tonne. Large bakeries and other industrial processors can easily manage such products, and that also influences the market.
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The market for milk and whey powders also presents a mixed picture. Prices for skimmed milk powder are relatively stable and low, due to high milk powder production. This is not the case with the dairy processors themselves, but primarily with companies that purchase surplus skimmed milk concentrate from these processors, dry the product themselves, and then market it at a lower cost. Weak demand is also a contributing factor. On the positive side, export demand for milk powder is increasing, and stocks may be shrinking slightly. Skimmed milk powder is currently selling for prices between €1.950 and €2.070 per tonne, depending on demand and destination.

The whey powder market presents a different picture. On the one hand, the price for whey powder for food is declining slightly, while the price for whey powder for feed is rising considerably, approaching that of the normally more expensive food whey. Not much whey powder is being produced either, partly because many towers are used for the production of skimmed milk powder. There's more profit to be made in that. This drives up the price of whey powder, primarily due to demand from the feed industry.
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If milk supply decreases slightly in the coming weeks, this situation is expected to change again.

The signals from the cheese market are all still red. Prices for Gouda and Edam foil cheeses have fallen the most this week, but other cheeses are also still trading at a loss. The cheddar market is reportedly the weakest. However, the bottom seems to be gradually coming into view for cheese, and the expectation is that prices will stagnate soon. However, there are no guarantees yet. Milk production must first decrease, after which a market recovery can occur.
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Liquid dairy is the only sector where everything is positive. The supply of raw milk in particular is lower than in previous weeks, due to seasonal trends and also because far fewer factories are currently undergoing maintenance and repairs. Prices for raw milk immediately shot up a few cents, and concentrate and cream also became more expensive.
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Meanwhile, the value of delivered milk continues to decline. At the commodity level, the delivered milk yields approximately €35 per 100 kilos. Fortunately for dairy farmers, not all milk is processed into commodities/bulk products. Considerable added value is always added during processing into consumer products and other specialties. According to the German IFE in Kiel, the commodity value in October was €39,10 per 100 kilos. For the Dutch situation, this is an additional €1 per 100 kilos. Nevertheless, this is still considerably lower than the DCA milk price index (of published milk prices) for that month.