Analysis Dairy
Liquid dairy market looking for new directions
The liquid dairy market is stabilising this week and looking for new directions. Prices for raw milk are largely stable, while slightly less is paid on average for liquid semi-finished products.
This is not entirely surprising. Prices have been rising more slowly in recent weeks and although in the Netherlands it seems that the low point in milk supply is almost behind us. Furthermore, the fat and protein levels in the milk are increasing significantly.
Meanwhile, large volumes are not being traded on the spot market. While some prices are stabilizing, they are doing so at a high level. This is regarding the supply side. On the demand side, the high prices are a barrier. Processors who do not need to buy milk or other products, do not do so.
With a purchase price of 60 cents or more for a kilo of milk, there is not much left to earn.
The German Rohstoffwert is mainly indicative, as it lags one month behind and is based on a milk value with different German levels
According to DCA's calculation, the production of butter and skimmed milk powder yields a gross value of about 69 cents per kilo of milk, while the production of cheese and whey yields 1 to 1.5 cents less, but that is about gross revenues. With a gross return of 7 or 8 cents, there is not much or maybe nothing left net. With a milk price of 54 or 55 cents, as the farmer can currently receive, it works better.
The sales of cream and concentrate are still going reasonably well. Skimmed milk concentrate is still as expensive as the skimmed milk powder that is often made from it. So, that is not profitable. There is better demand for the concentrate in exports to Greece. There continues to be good demand from there.
The prices for cream and butter are dropping slightly, as the market is seeking further direction. Butter remains scarce, but a German butter price of roughly €8500 per 1000 kilos caused disbelief on Wednesday.
The skimmed milk powder price is dropping back this week, but on the other hand, the cheese price continues to rise. Manufacturers are producing at full capacity.
As a result, the prices for liquid whey continue to decline. Whey concentrate fetches between 40 and 50 cents per kilo, almost half of the peak price a good month ago.
Klaas van der Horst
© DCA Market Intelligence. Op deze marktinformatie berust auteursrecht. Het is niet toegestaan de inhoud te vermenigvuldigen, distribueren, verspreiden of tegen vergoeding beschikbaar te stellen aan derden, in welke vorm dan ook, zonder de uitdrukkelijke, schriftelijke, toestemming van DCA Market Intelligence.