Analysis milk
Dairy industry heads into Christmas with almost free milk
Wherever goods change hands, there's always a market. However, the usual rules don't apply to the spot market for liquid dairy products these weeks. Due to high milk supply, a series of holidays in quick succession and in the middle of the week, and staff taking time off, the liquid market is in survival mode for a while. Normal, or reasonable, prices are temporarily unavailable.
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Surplus raw milk and skimmed milk concentrate are selling for extremely low prices. Sometimes for practically nothing. Spot milk, which just a few weeks ago fetched around €30 per 100 kilos, is now selling for €6 to €4 per kilo, and often even less. As long as it's gone. This is breaking new low records.
Skimmed milk has been yielding virtually nothing in Northwest Europe for some time now. Skimmed milk concentrate—a thickened, protein-rich product that recently fetched €1.200 to €1.400 per tonne of dry matter in early December—is now trading at €260 per tonne according to DCA Market Intelligence.
There's also a much cheaper product on the market. In some cases, the price drops to less than a tenth of the quoted price, but that's usually in France or sometimes Germany, where transport costs and the availability of drying towers make processing unattractive.
Those who were smart will have made arrangements well in advance for the disposal of surpluses around the holidays; those who didn't will be left with the headaches.
Cream remains the most price-retaining product, although this product also lost over 11% of its value last week. The DCA price is now €3.190 per tonne of dry matter. That's almost €900 below the butter price, which is also almost unheard of.
At €4.075 per tonne, the butter price isn't historically low, but it is very low compared to last summer's price. This week, for the first time in a long time, the price didn't fall further and is even showing a slight recovery. However, it's uncertain whether this will hold, and it's certainly not enough to maintain the milk price that processors pay their farmers.
The powdered milk market isn't helping either. Prices for skim milk powder remain under pressure. The price for whole milk powder is showing a slight correction.
The price of regular whey powder is broadly stable.
The cheese market shows an increase for most products. The DCA Index rose by 24 points (0,77%).
This is an encouraging sign for producers, but it remains unclear whether this should be seen as the beginning of a recovery or a minor correction. Experience shows that the last weeks of the year are often not the best for drawing far-reaching conclusions about the market.