204th Edition of Foodcom DAIRY Newsletter

Author
Foodcom Experts
06.02.2024
204th Edition of Foodcom DAIRY Newsletter
Summary
Table of contents
  • Amid global volatility, skimmed milk powder prices remain precariously balanced, reflecting the complex interplay between supply and demand.
  • The butter and cream markets show remarkable price volatility, highlighting the sensitivity of these segments to external market forces and consumer demand.
  • Modernizing the pricing formulas in the Federal Milk Marketing Orders could reshape market dynamics for dairy farmers and consumers.

Hello Partners!

Welcome back to our Newsletter!

In this issue, we provide a compact overview of the current situation on the dairy market, focusing on the most important trends and developments in various segments. We examine the price and market dynamics of milk powder and find that they are stable under changing market conditions. We also look at key movements in the whey and cheese segments. Our aim is to paint a clear and informative picture of the factors currently influencing the dairy industry.

Let’s take a look at what else is happening in the dairy market!

Products of the Week

Skimmed Milk Powder

Prices for SMP generally remain stable, but there is still price pressure. Currently prices are around 2350-€2400 EUR/MT, although cheaper offers can be found on the secondary market. Price uncertainty continues to affect the market for this product.

Whey Powder

Prices for Sweet Whey Concentrate have risen compared to last week, up to 500 EUR/MT FCA. We are currently experiencing an upward trend with strong demand for this product, especially for the production of WPC 80/90. On the other hand, we are seeing price pressure on SWP, with prices across Europe lower this week than in previous weeks.

Cheese

We continue to observe price pressure on the cheese market. Prices for various types of cheese, such as Gouda, Mozzarella, and Cheddar, remain low. Gouda can be purchased for around 3850 EUR/MT FCA, Mozzarella for around 3500 EUR/MT and Cheddar for around 3900 EUR/MT. Gouda/Edam still below the price level of Cagliata.

Interestingly, these prices come directly from the producers and not from the suppliers, which could have an impact on competition in the cheese sector.

Fats

We are currently experiencing high volatility in butter prices on the market. Initially, butter prices hovered around 5100 EUR/MT, but then soon began to rise. Currently, the demand for butter is in the range of 5200 to 5300 EUR/MT FCA, which indicates an increase in butter prices since the beginning of the year. It is also important to note that butter prices are closely linked to the retail price of butter in Germany and should remain at a level of at least 5650-5750 EUR/MT.

Liquid

We are seeing an increase in the price of Raw Milk on the dairy market. Demand on the spot market is stable, but changes in commodity prices and weather conditions have an impact on milk production, which may influence future price trends.

Cream prices are subject to fluctuations. Last week, prices initially ranged from 5850-5900 EUR/MT and even reached 6200-6300 at the end of the week. Demand for cream remains good and the price of cream is closely linked to the retail price of butter in Germany.

Skimmed Milk Concentrate prices have risen compared to last week and are at 2250-2300 EUR/MT FCA. We are currently experiencing good demand for this product, possibly due to its price stability.

What else?

European farmers, angered by cuts in subsidies and environmental regulations, are stepping up their protests. Thousands of Belgian and French farmers are demonstrating in front of the EU institutions. One of the concessions made by the European Commission is that fallow land can be brought back into production. Farmers are calling for greater support amid the economic strains. Tensions are rising ahead of the European Parliament elections in June amid fears that far-right parties are gaining influence. The survival of family farms in Europe is at risk as discontent grows.

The Ukrainian dairy sector is in crisis due to a shortage of raw materials and rising imports, prompting local processors to urgently request government aid. The Ukrainian parliament has scheduled a public hearing for February 8 to address critical issues such as the shortage of raw milk. A 4% decline in cattle numbers in 2023 has increased pressure across the value chain and led to a 40% increase in butter prices. The industry is calling for government intervention to stabilize the situation and ensure its survival. The upcoming hearing is crucial to find effective solutions.

The Federal Milk Marketing Order (FMMO) hearing ended after 12 weeks of deliberations to modernize the pricing formulas in all 11 FMMOs. A judge will review the documents for two weeks, followed by a 60-day comment period. Producers can agree or disagree with the changes, which will potentially affect milk prices until 2025. Urgent updates to the Class I movers are being advocated to help struggling dairy farmers. Future changes to the Farm Bill could make the process redundant and leave the pricing formulas in the hands of the USDA.

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