How the Dutch dairy stock has fallen

Dutch milk production came under heavy pressure in the first half of 2022. Up to and including June, production was 102,4 million kilos lower than in the same period of 2021. What does this mean for dairy stocks?

Due to, among other things, the high feed costs, the solids contents in the milk also left something to be desired. Butterfat and protein contents together were 2,88% lower than in the same period last year. Based on the production availability of butterfat and protein, this amounts to a 295,7 million kilo lower availability.

If we look at the export position of the Netherlands, we see that in the same period the export volume in kilos of milk equivalent (LME) was 48 million kilos lower than in the first six months of 2021, i.e. a contraction of -1,92%

It is striking that the Dutch export to China alone (until July 2022) amounted to a decrease of 110 million kilos. So there has been positive compensation elsewhere. This mainly occurred in cheese and baby food exports, both to the United Kingdom. If we look at Dutch imports, we see an increase of 51,9 million kilos of milk equivalent, or a plus of 28,74%.

The Dutch intra-EU trade looked like this:

Based on this, we can make the following balance:

It is clear that stocks are greatly reduced if we calculate with the solids yield in the milk. Related to production, however, that is minus 3,01%. Based on milk production, stocks would have decreased only slightly by 0,21%. 

Price drop is not obvious
What the second half of 2022 will look like remains uncertain for the time being. July, however, gives rise to a somewhat more optimistic outlook. Milk production increased by 1.8%, but corrected for lagging fat contents, this amounts to 0,9% in practice. Until July 2022, milk production fell by 1% or -81,2 million kilos. Fat levels decreased -2.27%.

A lot will still need to be done to get production and dry matter levels back up to standard and for the time being there are few signs that this will happen in the near future. This means that price falls in the short term are not foreseeable for the time being.

Robert Schorsij

Robert Schorsij has been active in the international dairy world for 35 years. He worked at Hoogwegt, Kiwi Cooperatives (Fonterra) and Ecoval, among others. For 10 years, Robert has focused on research and consultancy and publishes weekly The Greenmark Dairy Report.

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