Spotlight on Dairy: prices, future trends & market insights! [221th Edition of Foodcom DAIRY Newsletter]

Hello Partners!

Welcome back to our Newsletter!

In our latest report, we analyze the current market situation for dairy products in Europe. We focus on the prices of Skimmed Milk Powder, Cheese, milk fats and liquid dairy products and provide detailed data on their price fluctuations and market trends. We also discuss the outlook for milk production in the EU in 2024, the impact of agricultural policy and environmental initiatives on the dairy sector and the likely changes to the dairy market in Ukraine, which is planning significant investment and industrial development despite the ongoing armed conflict.

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

Produkty Tygodnia

Skimmed Milk Powder

In the market for Skimmed Milk Powder (SMP) for bulk feed, transactions were made for around 2400 EUR/MT in the 3rd quarter, which corresponds to a decline of almost 100 EUR/MT.

The situation for food-grade SMP is stable and unchanged. Producers are asking prices between 2450 and 2550 EUR/MT FCA, although it is still possible to find some lots trading below these levels. Futures have also fallen slightly.

Cheese

The reported prices for cheese are as follows: Gouda at 4050-4150 EUR/MT, Cheddar at 4350-4450 EUR/MT and Mozzarella at 4000-4050 EUR/MT. Despite these list prices, all sales last week were below these values. Traders and end users want to buy products at the lower end of these prices, but manufacturers are holding prices at the same levels. In addition, we continue to see a lot of interest in Cagliata.

Fats

Butter prices appear to have peaked last week at 6800 EUR/MT FCA. Information from the market is mixed, with some producers looking to sell at 6700 EUR/MT and above, while in central Europe between 6500 and 6600 EUR/MT. The new German retail price for June has been set at around 6250 to 6350 EUR/MT, but still well below the current spot level for bulk butter.

AMF and Butter Oil prices have not changed since last week.

Liquids

Cream prices have slightly increased last week, especially in central Europe, ranging between 7000 and 7300 EUR/MT FCA, with some reports even quoting prices above 7700 EUR/MT. However, we see that prices may stabilize in the coming weeks.

The Skimmed Milk Concentrate market remains stable, with prices reported to be around 2100-2200 EUR/MT FCA.

Spot prices for Milk have continued to rise, with some reports of prices above 0.50 EUR/KG. Supply has peaked in many countries and extreme wetness is reported in several regions, particularly in the Netherlands and Germany.

Whey powders

The SWP market has cooled somewhat. SWP Food availability in Central Europe is limited. Customers report that the product is sold out in many regions. Nevertheless, demand for SWP from outside Europe is high, and prices remain at the same level as last week.

The price of Sweet Whey Concentrate has fallen below 400 EUR/MT FCA. In addition, some drying towers have zero capacity, which means whey producers are forced to sell their products quickly at reduced prices.

What else?

Europe

EU milk production will decline slightly in 2024 due to fewer cows, despite an increase in their productivity. The decline in fluid milk consumption will continue, while cheese production will increase due to strong domestic and export demand. Butter production and exports of dairy products such as skimmed milk powder will also decline, mainly due to lower demand from China and competition from New Zealand. The EU dairy sector is facing challenges from the new Common Agricultural Policy and Green Deal initiatives, which is affecting farmers’ production decisions. The impact of the war in Ukraine on production costs will diminish.

The Ukrainian milk industry is set for a significant boost, with industrial output expected to increase by 50% over the next two years due to substantial investments, according to Vadim Chagarovsky, head of the Union of Dairy Enterprises of Ukraine. As of January 2024, Ukraine’s dairy herd includes 1.35 million cows, with industrial farms, which contribute 94.5% of processed milk, set to grow significantly. Despite the ongoing conflict, many Ukrainian milk farms are ready to invest in their operations. A new state aid scheme, featuring soft loans with subsidized interest rates, aims to enhance the competitiveness of Ukrainian dairy producers against European counterparts.