Analysis milk
Sharp recovery of liquid dairy products is due to protein
The dairy market is seeing further recovery this week, but not across the board. The price increase for skimmed milk concentrate is particularly spectacular. This week's DCA price is 85% higher than last week's. This is because more long-term processing contracts have been signed for this product, resulting in less availability on the spot market. The supply on the spot market for raw milk is also declining slightly.
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However, the spot milk price still hasn't exceeded €20 per 100 kilos, with the milk price in the Netherlands still below that in Germany. Despite this, DCA prices rose sharply, with increases of 22% to 25%.
The price recovery is exclusively focused on protein, but cheese is not sharing in the recovery this week. Prices for Gouda and Edam foil cheeses are under slight pressure, mozzarella is stagnating, and the cheddar market is also experiencing slight pressure. The natural cheese market is also difficult due to a large supply.
The powder market is performing better. This isn't immediately apparent for "flat" whey powders, although there no longer seem to be any surpluses in this market. Otherwise, the whey market remains stable. Whey concentrate is in high demand and still commands relatively high prices. The same applies to "high-quality" whey powders, particularly WPC80. For the time being, this market even seems almost insatiable.
Meanwhile, the market for skimmed milk powder is also becoming more active. Skimmed milk powder for food is trading at almost €2.150 at DCA this week, while exports are still going strong.
Competitive, but low
The aforementioned price isn't a price that allows for high milk payments to farmers, but it is higher than it has been in many months. At the same time, the price is still low enough to be competitive on the global market and to relieve pressure in Europe. Dairy surpluses must be exported.
The price for whole milk powder is showing little movement. Whole milk powder should benefit from the increased demand for milk powder, but the value of the milk fat in whole milk powder is declining.
Meanwhile, the milk fat market continues to trend downward. It's notable that the price for cream is falling the most, but at the lowest, while the price for butter is falling much less and remains much higher. The question is which price best reflects the market.
Based on the cream price, the butter price would still be too high, but based on the butter price, the cream price represents an overreaction to the current weak market.
Which value is true
The fact is that the butter market remains difficult, with various parties choosing to store their butter in cold storage instead of selling it. The current price is reportedly far too low. Compared to a year ago, that's certainly true, but circumstances have changed significantly.