Analysis Dairy
Dairy prices remain steady in calm conditions
The dairy market is not going through the most sparkling weeks of the year. It's vacation time, so the pace of trade is a bit slower than usual. There isn't much movement in prices, apart from some ripples in the markets for butter and mozzarella.
In the liquid dairy trade, there is more activity this week (and prices often rise due to limited availability), while the sentiment in the commodity market is much calmer. In broad terms, it's a repetition of previous weeks.
Mozzarella on the rise
The most striking is the price of mozzarella, which is now rising again to €3,980 per ton after a weak period. Prices for delivery from September are even higher. Increasing demand from Southern European destinations, due to the tourist season, is supporting the market. The other cheese prices are moving fairly calmly, with weak demand nearby. Producers are often more optimistic for the period after the holidays, making it difficult for buyers to secure volumes for the fourth quarter without paying a hefty premium. This is often not done, meaning that buyers are short covered.
Cream boosts butter
The butter benchmark is also gaining ground, rising by €70 to €6,735 per ton. This is the largest price increase in five weeks. The main cause is the tight supply situation. Demand is not very strong during this holiday period. The rising cream market is also boosting butter prices. Butter would actually need to rise by a bit to seamlessly align with the current valuation of cream and thus be profitable to produce. The question is whether that will be possible, given the resistance to high butter prices, especially from supermarkets.
Milk powder weakness
The milk powder market remains weak and lackluster. Large inventory positions at producers and traders are making end users reluctant to do business. Not to mention the weak export demand. There may be some hope for a strengthening powder market later this year, as indicated by the higher prices on the futures market.
