Solid dairy gets wings, liquid is struggling

This is evident from DCA's weekly survey of the dairy market. Prices for raw spot milk in the Netherlands, the Benelux region, and France remain very low, the lowest in years. In the Netherlands, the price is less than a third of the average factory price.

Prices for skim milk concentrate also remain very low. This week, the price dropped by another third.

In itself, this cheap concentrate could be profitable, provided there was sufficient capacity to dry it into skimmed milk powder. Unfortunately, that's the problem. To find drying towers with spare capacity, you have to travel to Poland or another Eastern European country. Everything in Western Europe is fully booked. As a result, some concentrate is sometimes also sent to animal feed or fermentation.

Cream, on the other hand, is selling well. Processing isn't a bottleneck here. There's sufficient demand for fresh sales, and plenty of companies are willing to make butter from it. The DCA cream price has shot up by a whopping 21% this week, the strongest of all dairy prices and the strongest since March 2022. The butter price follows with an 8,7% increase.

Those companies that do succeed in converting skimmed milk concentrate into skimmed milk powder are also seeing their prices for the latter increase significantly, by an average of around 5%. Stockpiling isn't a problem, and exports are going well.

Compared to recent years, the price for skimmed milk powder is also moving towards a good level. The price is still below the five-year average, but that's due to the exceptionally high price in 2022. After that, the current price is at its highest level in recent years, and also above the prices in 2021, 2020, and 2019. Things are starting to look up for powder manufacturers. The price of milk fat, as mentioned, is also helping quite well again.

On the cheese market, almost all prices are rising, even this week by increments of around 5%. Only the natural cheese market is struggling, as are those for some smaller varieties. The natural cheese market is struggling under the pressure of high inventories, which are also increasingly aging. This is costing money.

However, younger cheeses are doing well and are rapidly rising in price. Supplemented by the yields from pasture, they provide a good basis for milk prices. Farms that can upgrade their pasture to higher WPCs are achieving the best returns. The WPC market is seeing increasingly higher prices.

This does have consequences for the animal feed market. It's no longer profitable to produce regular whey and feed whey. The market for this is clearing out, supplies are running low, and prices are skyrocketing.

The animal feed sector must therefore partly switch to another product.
If this improves the value of the entire dairy package, few farmers will probably have any problem with it.