142nd edition of Foodcom DAIRY Newsletter
Food prices continue to rise, and the UK will not be excepted – food along with nonalcoholic beverages have already increased by 2.3% between June and July 2022. This data brought the annual inflation rate in this area to 12.7%, based on the UK CPI report. The largest contributors to the increase include milk, and cheese commodities, along with eggs. Products with the largest escalations on the other hand, are low fat milk, whole milk, and butter. With multiplications in energy bills and soaring supermarket prices on the horizon, consumers are forced to make decisions on food staples with already tight budgets. The way is paved for a hot summer of price hikes that will turn into a demanding fall and a distressing winter as households battle inflation. The UN Secretary-General stated that the organization is working with the United States and the European Union to overcome obstacles to Russian food and fertilizer entering the world market. This could affect the industry critically, further calming the commodity market and lowering prices for consumers. Regarding dairy products – it is not that simple. As fresh dairy products are subject to strict storage conditions, they cannot remain with producers for too long. That is why so many producers are concerned that disruptions in the energy supply, of which prices are undoubtedly rising, could cause problems in the production process. The issue concerns milk powders especially. Droughts in Western parts of Europe have undoubtedly worsened the situation.
Continue reading to learn about this week’s market insights.
With us, you’ll never miss a thing!
All products featured in this newsletter are available for purchase. Visit our website by clicking on the image of the product of interest and fill out the contact form.
Most of the end customers have bought Skimmed Milk Powder into the Q4 already and stocks are 70% purchased regarding the end of the year. This results in quota changes by dairies to be as low as EUR 3.50/KG EXW. After the previous GDT, this milk powder was being traded below EUR 3.40/KG. The rumors are that the situation with ONIL tank in Algeria may affect prices for the European market of this powder.
The market currently shows large differentials in prices offered for Full Cream Milk Powder.In Western Europe the commodity can still be bought at around 4.60 EUR/KG. Polish dairies, on the other hand, are still struggling to maintain a price starting at five per kilo. The industry is experiencing fluctuations in rates.
In recent weeks an increase in interest from countries in the Middle East primarily has been distinguished. The Chinese market still remains closed regarding Sweet Whey Powder. The number of incoming inquiries cannot be stated regarding participants of the product for exotic countries.When it comes to certain parts of Europe, the said regions are characterized by cheaper prices of whey than U.S. -origin products.
There have been corrections in prices, and so far Western producers are keeping their quotes at around 10,50 – 10,80 euros. Manufacturers of Whey Protein Concentrate can no longer suppress the reality and are beginning to sell stocks they have been keeping in warehouses.
Compared to other raw materials in the market, Milk Protein Concentrate is one of the least available product. Nonetheless, the commodity stays at attractive prices and continues to have favorable demand.The evaluation for milk protein compared to whey protein keeps this particular product at a high price point.
The upward trend for Cheeses is a similar experience to what usually is case with the start of the school year.Consumer demand will drive the market for this product over the next month, some of which are already visible. Demand is also increasing in the case of Cagliata and Mozzarella. We could observe a slight rise in the price of Cheddar cheese.
Polish fresh Butter is offered at 6.85 EUR/KG. We can notice increases in Cream trade indexes over this past week, which has had a slight accelerating effect on the product prices. End-customers have began searching for contracts who can supply larger volumes for Q4.
Summer heat and drought continue to suppress milk production and cause constituents to drop. In the west of Europe, Skimmed Milk deliveries are below year-to-date levels. However, in some countries, such as the Baltic region or Austria, production has increased in H1 of this year. Although overall the record-breaking temperatures and drought having spread into the test of Europe has further caused farmers to suffer losses in milk and crop yields. The Cream situation could be described as similar to the last few weeks.