Analysis Dairy

Spot milk cautiously tends towards 50 euros again

July 11, 2024 - Wouter Baan

The last time the spot milk benchmarks of DCA were above the psychological threshold of €50 euros was in the fall of 2022. In that memorable year, the dairy market had risen to great heights only to fall back considerably in 2023. Although the market as a whole is currently not very positive, spot milk prices are moving upwards. The expectation is also that this trend will continue.

The DCA benchmark or the Dutch market rises by €1 to €48 this week and therefore remains below the mentioned threshold. However, the €50 for spot milk seems within reach. Despite it being the holiday period, this is not a hindrance to higher prices. Despite the milk supply often exceeding expectations due to the cool weather conditions, factories are currently in balance.

Little surpluses
There are hardly any surpluses of free milk, partly because seasonally the supply is decreasing. Buyers must therefore dig deep into their pockets if they want to unlock volumes. It is also striking that spot milk prices are rising, even though there were factory disruptions in some places this week. This can be seen as a strong signal. Spot milk prices are also rising this week in Germany, as well as in France.

You can also count on the fact that spot milk prices will continue to rise in the coming months, as this is also customary seasonally. The expectation is that 'free milk' will further outpace the payment prices of processors, which often show a flattening movement.

Cream and milk concentrate also more expensive
Cream and skimmed milk concentrate prices are also rising due to limited availability. There is no support from the stable market in the form of butter and milk powder. However, there is demand because factories and trading houses are willing to build up stocks for later this year. Butter stocks are still tight.

There is also confidence in the milk powder market, although not very convincing yet. For future deliveries, for example, a premium of a few hundred euros per ton must be paid on top of the current daily prices. This can be stimulating for producers to build up stocks.

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.