Analysis Dairy
Butter and cream booming again
On the dairy market, parties often agree that historically high prices will continue for the time being. This idea is supported by rising futures markets. Tight supplies and good market opportunities provide strong support. Especially the butter market is firm. To a lesser extent, this also applies to cheese, while milk powder prices are looking up again.
Meanwhile, retailers have also come to realize that high prices are the new reality. Albert Heijn CEO Marit van Egmond specifically mentioned dairy this week in an interview as a product category where prices remain consistently high. She also mentioned beef, cocoa, and coffee in the same breath. The high prices seem to persist for the time being. Market insiders increasingly expect a stable market. At least until the first quarter of 2025, which is a commonly heard market view.
Cream passes psychological threshold
It is increasingly noticeable in the butter market that Christmas is approaching. This creates additional demand in the short term, putting pressure on already tight supplies. Large consumers such as bakeries have not always covered their volumes for the fourth quarter yet and therefore have to pay dearly at the last moment. A significant setback, especially since cocoa prices have also risen significantly in recent months. The DCA quotation rises by €145 to €7,885 per ton this week. Cream rises even faster, and the quotation exceeds €10,000 for the first time in history.
The supply in the liquid market is extremely tight, as milk supply in our part of Europe is currently at its seasonal low. The supply is expected to increase somewhat in the coming weeks. Historically, cream prices drop sharply from the end of December when the holidays around the end of 2024 approach. Market participants are expected to be alert.
Cheese market not straightforward
The cheese market is more uncertain. The foil cheese quotations are indeed rising, but less convincingly than butter. Gouda increases by €50 to €4,620 per ton. At these levels, there is theoretically enough volume available, but the delivery times are very short. Often the product is barely four weeks old. Cheddar takes a pause this week. A fairly ample supply from Ireland means that the cheddar market has no upward potential. In September, Irish milk supply exceeded the 2023 level for the first time, which logically explains the increase in production. Pressure on mozzarella continues as demand has dropped significantly since the summer.
Milk powder on the rise
A notable development this week is the rapid price increase of skimmed milk powder, which rises by €80 to €2,525 per ton. There are signals that China produced less milk in the third quarter than last year. According to Chinese statistics, milk powder stocks have also decreased significantly. The decline is remarkable because there were recent reports of large surpluses. It remains to be seen how the situation in China will unfold in the coming period. For now, the milk powder market is picking up slightly due to improved export prospects. The better sentiment still needs to be confirmed.
Wouter Baan
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