Analysis Dairy

Calm liquid dairy market with few surpluses

July 4, 2024 - Wouter Baan

In the liquid dairy market, one can look back on a quiet week without too many noteworthy events. With the summer holidays approaching, there is less demand from the fresh segment, which is also related to the lack of convincing summer weather. The Southern European countries are also (still) not really active in the market.

In general, liquid dairy prices are moving sideways. The cream benchmark of DCA even comes to a standstill, which is a rather unusual development in this usually dynamic market. The increase that was visible in recent weeks has come to an end. The main cause of this is the lack of demand. Additionally, the butter market is moving slightly downwards again, which also contributes to the weakening movement. Cream was already quite expensive to make butter profitably.

Few surpluses
In addition to the lack of demand, the availability of liquid dairy is quite good. Even better than expected. This is due to the favorable weather from the perspective of milk production. The current temperatures almost approach the perfect conditions for this time of year, you could say. This is also evident from the weekly German milk supply figures from ZMB, which are more than one percent higher compared to last year, while the number of dairy cows has decreased. Many German and Dutch processors are in balance between supply and production, resulting in relatively few surpluses at the moment.

This likely means that skimmed milk concentrate prices will move upwards again this week, without support from the milk powder market, which remains consistently weak. Also, the surpluses from France are not as high as expected, or even the opposite. The latter is from the perspective of the buyer.

Spot milk price takes a step back
After four weeks of rising prices, the Dutch spot milk benchmark takes a step back this week to €46 per 100 kilograms. This level is not far from the basic payment prices that are still rising in mid-July (for the processors that have published so far). However, the upward momentum seems to be weakening as the dairy market enters the usually calm summer period. Typically, there is more demand for liquid dairy from countries in Southern Europe, such as Italy, during this time. But at the moment, buyers from these countries are staying calm, as the supply there is also in order.

Wouter Baan

Wouter Baan is the editor-in-chief of Farmerbusiness and a market specialist in dairy, pork, and meat at DCA Market Intelligence. He also tracks developments within the agribusiness sector and conducts interviews with CEOs and policymakers.
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