For the dairy market, it was a special week. In the middle of summer, the prices for cream and butter broke records. Especially the price of cream reached great heights. Never before has this product been so expensive as this week. The rest of the market followed in a slower pace.
The DCA quotation for cream almost touched the threshold of €9000 per ton. The butter price is also at a peak, but still remains below the record of spring 2022. The cream price exceeds the old record by €55.
The difference between the cream and butter quotations is now also greater than in 2022. There is now a gap of €1630 per ton between the quotations for cream and butter, whereas the gap was €1520 per ton back then. This large gap does not really encourage extra butter production, as cream is much more profitable in its unprocessed form.
Butter price expected to rise
Therefore, it is expected that the butter price will continue to rise further, as the shortage will grow. The futures market price for October is already around €7600 for a reason.
It should be noted that the price record is set in a market with low supply, but perhaps that is precisely why. Milk supply is decreasing, and market tightness is increasing.
However, the tightness is not evident everywhere in the market. Skimmed milk concentrate, which remains after the production of cream, has been fairly stable in price for a long time and barely moved this week.
Unlike with cream and butter, there is no record or approaching record here. Skimmed milk concentrate is even priced €1650 per ton below the record of spring 2022. There is not much to make a profit from it. Skimmed milk powder remains weakly priced and not expensive enough to be turned into concentrate. The main market outlet is for the fresh market.
Raw milk doesn't follow cream
Raw spot milk is well priced and slightly more expensive this week than last. The price also remains above the average payout price of the factories. However, the spot milk price also does not break records. Although raw milk availability is limited, many parties find milk priced above 50-51 cents per kilo quite expensive. Those who urgently need milk of a certain quality typically pay the higher price, whether it's 54 or 55 cents.
This does not mean that cheaper milk cannot be found, but it usually involves accepting a different quality. Traders report that milk can still be bought in France for 45 to 46 cents per kilo. This is typically milk with a much lower fat content, but fat levels in Dutch, Belgian, and German milk are also declining rapidly.
From small tot big volumes
The big question is whether and for how long the current price increases will continue. Prices are high, but the volumes sold are quite small. The exciting question is whether the high prices will persist when major buyers, such as retailers and large food companies, put pressure on the market. It is a fact that the current price increases are not limited to the liquid market alone. It is not just a party in the milk fat market. Cheese prices are also rising sharply, while prices for higher whey products have been strong for some time. Even milk powder prices are slightly increasing, despite some disappointing export contracts.