Analysis milk
Liquid dairy market takes a step back
The dairy market has had a relatively calmer trading week after a few much wilder weeks. Only cheese and butter saw clear price increases, but the upward steps were smaller than before. Liquid dairy took a small step back.
The spot milk prices in the Netherlands and Germany remained virtually stable this week, but at a high level and still 5 to 10 cents above the milk money farmers receive from the factories.
Large volumes of milk however did not change hands due to a declining milk supply, with most processors holding onto the milk they collect.
They try to process and add value to it themselves. Due to the declining supply, this is often als a pure necessity, as otherwise contract obligations may not be met and penalties may follow from retailers and other customers. Those who still want milk, cream, or concentrate must pay up, and then some product becomes available.
Raw milk, however, is not the ideal product for transportation. Skimmed milk concentrate and cream are better suited for that. And because the price of concentrate has been quite high lately, several companies decided to put some extra volume on the market. Selling concentrate was more attractive than making milk powder from it. Skimmed milk powder is not expensive enough to justify drying concentrate, and the milk powder price is still increasing only slightly.
But by putting a lot of concentrate on the market, the price also decreases. The price of cream also slightly drops for the second week in a row. It is somewhat guesswork as to the cause of this. It is possible that the high price is somewhat off-putting.
On the other hand, the butter price is becoming slightly firmer again, making butter relatively more profitable than cream. Another noticeable movement is that butter oil is now clearly above the cream equivalent.
