Analysis Milk
Spot milk prices surge in wild market to 60 euros
The dairy prices have been taking big steps up for weeks and the end of the rally is not yet reached. The spot milk benchmarks of DCA are also participating in the rally and this week surpass the €60 per 100 kilos mark. A new record is within reach.
The DCA spot milk benchmark for the Dutch market rises this week by as much as €6.50 to €60.50 per 100 kilos. Only in 2022, when the raw material markets soared to record highs due to the then just erupted war in Ukraine, did spot milk prices go higher than now. The record level stands at €63.50 per kilo. A new record is therefore within reach, considering the rapid pace of increase at the moment. And the end of the rally is not yet reached. However, historically, the spot milk price often peaks at this time of the year.
Expensive shipments
Also, cream is on the rise and increases to almost €10,000 per ton. A full tank truck of cream thus represents a value of about two and a half tons(!). Butter also has a record. Not only the fat side of the dairy market, but also cheese prices are rising rapidly. And even the sluggish milk powder market is trending upwards. The raw material value of milk has skyrocketed in recent weeks and in many cases is well above €60 per 100 kilos, as shown by data from DCA Market Intelligence. Therefore, it is not very surprising that such high amounts are paid for spot milk.
Concerns are growing
For weeks, there have been concerns in the dairy market about the advancing bluetongue virus. And the concerns are not diminishing. More and more signals indicate that milk processors have much less supply than they had anticipated in their forecasts. Companies that are usually active as sellers are now desperately looking for volume to meet their delivery obligations. However, supply can also be obtained again, as the current prices also motivate processors to market volumes on the spot market.
Market ceiling
It is difficult to estimate where the ceiling in the dairy market lies. Demand from the fresh segment is likely to weaken in the coming weeks as temperatures drop. At the same time, the milk supply is seasonally still decreasing for the time being, while the Christmas demand slowly but surely comes back into play. It remains difficult to estimate to what extent the bluetongue virus will affect milk production in Europe. It is clear, however, that there are major concerns about the availability of milk.
