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Dairy markets are converging, valuation is good
For the first time in weeks, the liquid and solid dairy markets are moving slightly closer together again. Prices for semi-finished products such as skimmed milk concentrate and cream have risen sharply, while milk powder prices have fallen slightly. Read more about this in this analysis.
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Both movements likely have more to do with a chaotic market just before Easter than with a structural turn in the market.
Milk supply remains consistently high and is even rising considerably in parts of Europe. Consequently, spot milk for raw milk remains weak. In the Netherlands, the price hovers around €13 per 100 kilos. In Germany, the spot price is a few euros higher, while in France, the spot market price hovers around €3 to €4 per 100 kilos.
Many market participants expected that the prices of skimmed milk concentrate and cream would also remain low or fall further. The opposite happened. Many companies had to purchase additional product volumes at the last minute and discovered that they were not the only ones. The ice cream industry is also entering the market with additional stock. As a result, the DCA quotation for skimmed milk concentrate rose by over 43% to €1.170 per tonne of dry matter. The cream quotation also rose by several hundred euros per tonne, but the percentage increase was more limited: +8,55%.
Finally, the cheese market is cooling down slightly, but no turnaround is noticeable here yet. Cheese producers are actually passing on the higher payout price to the selling price of their cheese.
In the meantime, the valorization of the milk looks set to work out. According to DCA's calculation, the commodity value of cheese, milk powder, and milk fat is above Frieslandcampina's Guaranteed Price.