149th Edition of Foodcom DAIRY Newsletter

Author Foodcom
Reading time 5 minut
Publication date 13 October 2022

Global food prices continue to fall. After reaching record highs in March of this year, the steady decline continues. This has been helped in particular by the fall in oil prices, which has offset the rise in grain prices. Of course, prices are only falling compared with the previous month; they are still higher than in the same period last year.

The dairy market has become a challenge for everyone in the industry. The sharp increase in input costs has caused some serious problems. European milk supply has been well below expectations for several months now. The low assumptions have led to numerous shortages of dairy products throughout the industry. Stocks of key commodities such as butter, skim milk powder, whole milk powder and cheese are very tight, which has driven up prices. Many dairy prices have recently reached all-time highs, but now there are signs of possible corrections. However, milk collection volumes are still below industry expectations. This will continue to create high price volatility in the markets and impact everyone who trades these products. At the same time, demand for dairy products from Asian countries is low. We are watching developments closely, but for the moment it is quiet on this issue.

There is a lot going on, but basically all the events are still about the same problems. Producers are still dealing with the effects of the extreme summer weather, the market is hit hard by inflation and the war in Ukraine. Desperate times call for desperate measures. Or simply reliable business partners. This should not be forgotten.

Continue reading to learn about this week’s market insights.

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SMP

Many of the smaller producers have their warehouses full of Skimmed Milk Powder and are selling the product below the cost of production to maintain cash flow. SMP is currently under significant price pressure. Slight declines in quotations are still expected. They are predicted to continue until the second quarter of next year. There continues to be a great deal of uncertainty.

FCMP

The situation of Full Cream Milk Powder on the market remains stable. Most manufacturers and buyers continue to focus primarily on meeting current market needs. The product has recently remained at a surprisingly high level. The price also continues to be fair.

MPC 85%

Milk Protein Concentrate continues to be at a high level. At the same time, we are noticing that more and more alternatives with lower protein content are coming onto the market. The substitutes are attractive in the eyes of buyers thanks to lower, more affordable prices.

Gouda/Edam

The demand for cheese has weakened somewhat recently. There are more and more offers from all over Europe. The market situation remains stable, although prices have fallen slightly compared to last week.

Butter

The product is not in short supply on the market. A new German contract for cubed butter was signed at a price of about €7.40 per kilo. This price was driven by the still high level of fat prices and production costs that are not decreasing. The price forecast for Butter for the first quarter of next year is around €6.6 per kilogram.

Cream

In many European countries, the milk harvest is higher than a year ago. As a result, spot prices for milk are falling, which in turn affects prices for other dairy products. Milk consumption has also increased. All indications are that farmers in the EU will continue to rely on milk. The availability of cream was sufficient last week to meet the current market demand. Recently, the price of fat has weakened slightly. So far, this has not led to a drastic correction in Butter prices. Prices for all liquid dairy products have fallen slightly.