Dairy product prices soar: essential updates on Butter, Cheese, and more![231st Edition of Foodcom DAIRY Newsletter]

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The dairy market is currently characterized by price volatility and shifting trends. Skimmed milk powder and cheese prices are rising due to supply constraints and higher production costs. Butter and cream prices are also increasing, driven by strong demand. Skimmed milk concentrate remains stable, while high-protein whey products gain prominence. Meanwhile, Sainsbury’s is advancing animal welfare with AI technology, and France is expanding its bluetongue virus vaccination campaign to control outbreaks and protect livestock health.

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

Products of the Week

Skimmed Milk Powder

The market for skimmed milk powder for feed remains steady, with spot prices hovering between 2350 and 2375 EUR/MT. It appears more economically viable to market skimmed concentrate directly, priced between 2100 and 2150 EUR/MT FCA, rather than converting it into powder. A reduction in powder production might bolster future prices, evidenced by fourth-quarter futures trading at 2535 EUR/MT today.

The market remains stable with prices for SMP designated for food use staying consistent at approximately 2350 to 2400 EUR/MT FCA. The market atmosphere is generally quiet, with some discounted prices available for specialized products. Looking ahead, a price increase is anticipated towards the end of the year and into the fourth quarter, influenced by futures trends and the current disincentives for drying, indicating a potential shift in market dynamics.

Cheeses

Europe’s cheese market is in focus for the fourth quarter, with rising prices and limited supply. Cheddar prices rose to 4350 EUR/MT, driven by higher temperatures and lower availability. Emmental is also on the rise, with prices at 4600 EUR/MT, with further increases expected due to higher production costs. Gouda is trading up to EUR4,100/MT, and producers are cautious about Q4 sales due to rising raw material costs. Mozzarella prices remain high, supported by seasonal demand and concerns about availability in Q4.

Fats

Butter prices remain at or above 7200 EUR/MT FCA, but we are seeing as much as 7500EUR/MT in some regions. It is possible to obtain butter from less conventional sources, such as the Naples region, at lower rates. Importing butter under low import duties may again become attractive, with clearance prices ranging from 6400 to 6600 EUR/MT.

In addition to the rising butter prices, we are now observing Butter Oil and AMF prices exceeding 9500 EUR/MT.

Liquids

Cream prices have continued their upward trajectory, reaching 8700 to 8900 EUR/MT FCA DE, with prices in the Baltic regions and Poland settling around 9000 EUR/MT. This price increase is reflective of a steady demand in the market.

As for skimmed milk concentrate, prices have remained stable, fluctuating between 2200 and 2300 EUR/MT. This stability in the SMC market offers some predictability amidst the broader volatility in the dairy sector.

Sweet whey concentrate prices are currently set at 450 to 500 EUR/MT FCA DE/NL. Under current market conditions, selling the concentrate outright is more advantageous than processing it into whey powder.

EU milk production continues its seasonal decline with a notable drop in protein content. However, increasing monthly payouts to farmers could potentially enhance output in the fourth quarter.

Whey powders

The spot market prices for SWP feed are steady, ranging between 660 and 700 EUR/MT. Looking ahead, an increase is anticipated as we move into the fourth and first quarters. Given current price levels, selling whey concentrate is more profitable than producing whey powder. The industry is increasingly focusing on high-protein whey protein concentrates (WPCs) over traditional whey powder for feed use.

Moreover, WPC and WPI are experiencing high demand coupled with low availability, which is driving up prices in the market. Whey powder prices are currently hovering above 1000 EUR/MT.

What else?

Sainsbury’s invests in innovative solutions

Sainsbury’s has partnered with Vet Vision AI, a startup from the University of Nottingham, to implement an AI-driven technology for enhancing animal welfare on dairy farms. This pioneering system utilizes portable cameras to monitor cows’ behaviors in real-time, offering farmers actionable insights and suggestions for improvements such as enhanced housing and stress-reducing cow brushes. This technology not only aids in early disease detection but also boosts productivity by promoting better overall health and comfort for the cows. Already in use on 30 Sainsbury’s Dairy Development Group farms, there are plans to expand this technology further in the coming year.

France is still battling the bluetongue virus

France has escalated its response to the bluetongue virus by expanding its vaccination campaign after detecting two new outbreaks of a new variant, BTV3, in ruminants near the Belgian border. The virus, affecting sheep, cattle, and goats, has been present in parts of northern Europe since last year. The French farm ministry has increased the allocation of free vaccines to 6.4 million doses, up from 4.6 million, with the distribution starting Monday. This proactive measure aims to control the spread of the disease, which is transmitted by insects and can be fatal to affected livestock.