Analysis milk
Liquid down, solid dairy almost at basic price
The spot market for raw milk suffered another setback this week. Prices plummeted in the Netherlands, Belgium, and Germany. Other liquid products also suffered, with the exception of whey concentrate. Solid dairy products are moving in the opposite direction, returning to almost the base price for farm milk.
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Dutch and Belgian spot milk saw the biggest losses this week, falling by a quarter, according to the DCA quotation. German milk held up slightly better.
Skimmed milk concentrate fared no better. Compared to the previous week, the price of skimmed milk concentrate also fell by a quarter.
It's difficult to pinpoint a single cause. Milk supply is and remains robust, but that hasn't really changed. Exports of milk powder, in particular, are continuing, which should provide some relief. The problem is that a significant amount of factory maintenance has been and is being carried out, which isn't ideal with production facilities already nearly at capacity. If a malfunction occurs, a significant amount of dairy products quickly have to be discarded, putting pressure on prices.
Meanwhile, skimmed milk powder is doing unexpectedly well. European product is competitive on the global market, with prices steadily rising. This week, skimmed milk powder sold for prices of up to €2.600 per tonne and more, while the DCA price for the week as a whole stands at €2435 per tonne. This is also about 3% higher than last week.
The slightly rising butter price also provides excellent support. Although the market is nervous and volatile, the average price at DCA climbed to €4.170 per tonne this week, even despite a sharp drop in the price of cream.
Finally, the cheese market is also slowly moving upwards. Even cheddar is showing a slight increase. The cheese index is rising by dozens of points. Meanwhile, the whey market remains stable and high.
This is good news for the dairy farming sector, as the current price allows a company like FrieslandCampina to pay the basic milk price again, although the guaranteed price remains a bridge too far for now.