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The spooky season is almost behind us. This is a very naive statement, considering that the reality of business is always spooky. Of course, only for those who have no idea how to deal with it. In the latest edition of our Dairy Newsletter, we discuss the cases of those who are navigating the uncertain world of business quite well, because they are exceeding expectations or because they are using technological solutions that come from the future.
The ongoing war in Ukraine is having a significant impact on the dairy industry. Local companies are sounding the alarm about looming problems in the availability of dairy products in the country caused by the energy crisis. Russians do not have it any easier when it comes to consuming milk – a consumer rights organization reports the poor quality of much of the milk produced in Russia.
In the past week, all dairy products have seen price declines. Large quantities of spot milk are still available in the market, and supply continues to increase, depressing prices for both the commodity itself and other products. It could be seen that some EU15 dairies have increased payments to farmers for milk. At the same time, we are passing the low point of EU milk intake at the moment. Availability of most dairy products exceeds forecasts for the period, pushing prices up. Weak Chinese demand for dairy products continues, and many experts fear this will have a negative impact on the overall international dairy market. There is also a trend to favor liquidity over filled stocks. Experts have different opinions about the current market situation and forecasts for the future, but there is no doubt that changes should be monitored and acted upon.
Continue reading to learn about this week’s market insights.
With us, you’ll never miss a thing!
Lately, we have seen quite a few Skimmed Milk Powder offered well below current production costs. In the past week, major market participants who had previously played this card have stopped offering the product at discounted prices. The time is far from here for the market to begin to recover. The lower prices offered by producers and traders have attracted the attention of buyers who are likely to take advantage of the moment of correction and purchase the commodity at a bargain price.
As one of the few dairy products, Full Cream Milk Powder is fairly immune to market stimuli, so it can be described as the most price-stable material. Yet, this does not change the fact that the European product is much more expensive compared to the prices of this product from Oceania and Latin America, so it is mainly traded within the European Union.
Due to declining sales of Whey Protein Concentrate and the market correction in Skimmed Milk Powder, several manufacturers have switched their production capacity to Milk Protein Concentrate. The market for this product has the potential to command a relatively better price than the prices for the two previously mentioned products, and it is also much smoother in terms of liquidating the product and maintaining financial liquidity.
Spot prices for Dutch type Cheese for Q4 are still surprisingly high, while Q1 bids and expectations are weakening daily. Trader and buyer uncertainty is evident with this product. The situation remains dynamic, so keep a close eye on it.
Butter has undergone perhaps the most significant adjustment of all dairy products. The decline in interest is not as visible as in Skimmed Milk Powder, and buyers can conclude new volumes of Butter almost 1 euro per kilogram cheaper than in September this year. Opinions about the market situation for Butter are very divided. Polish producers try to keep the price quite high due to still high raw material prices, and the product they offer is about 40 euros per kilogram more expensive than expected in the EU15.
The price of Skimmed Milk Concentrate remains relatively stable compared to other dairy products, while the price of Cream decreased slightly last week. As with other products in this category, the European liquid market was somewhat weaker last week, with supply stable and demand remaining relatively low. The US market remains slightly stronger, but no significant price increases are expected.
The ongoing war in Ukraine is having a significant impact on the dairy industry. Local companies are sounding the alarm about looming problems in the availability of dairy products in the country caused by the energy crisis. Russians do not have it any easier when it comes to consuming milk – a consumer rights organization reports the poor quality of much of the milk produced in Russia.
In the past week, all dairy products have seen price declines. Large quantities of spot milk are still available in the market, and supply continues to increase, depressing prices for both the commodity itself and other products. It could be seen that some EU15 dairies have increased payments to farmers for milk. At the same time, we are passing the low point of EU milk intake at the moment. Availability of most dairy products exceeds forecasts for the period, pushing prices up. Weak Chinese demand for dairy products continues, and many experts fear this will have a negative impact on the overall international dairy market. There is also a trend to favor liquidity over filled stocks. Experts have different opinions about the current market situation and forecasts for the future, but there is no doubt that changes should be monitored and acted upon.
Continue reading to learn about this week’s market insights.
With us, you’ll never miss a thing!
SMP
Lately, we have seen quite a few Skimmed Milk Powder offered well below current production costs. In the past week, major market participants who had previously played this card have stopped offering the product at discounted prices. The time is far from here for the market to begin to recover. The lower prices offered by producers and traders have attracted the attention of buyers who are likely to take advantage of the moment of correction and purchase the commodity at a bargain price.
FCMP
As one of the few dairy products, Full Cream Milk Powder is fairly immune to market stimuli, so it can be described as the most price-stable material. Yet, this does not change the fact that the European product is much more expensive compared to the prices of this product from Oceania and Latin America, so it is mainly traded within the European Union.
MPC 85%
Due to declining sales of Whey Protein Concentrate and the market correction in Skimmed Milk Powder, several manufacturers have switched their production capacity to Milk Protein Concentrate. The market for this product has the potential to command a relatively better price than the prices for the two previously mentioned products, and it is also much smoother in terms of liquidating the product and maintaining financial liquidity.
Gouda/Edam
Spot prices for Dutch type Cheese for Q4 are still surprisingly high, while Q1 bids and expectations are weakening daily. Trader and buyer uncertainty is evident with this product. The situation remains dynamic, so keep a close eye on it.
Butter
Butter has undergone perhaps the most significant adjustment of all dairy products. The decline in interest is not as visible as in Skimmed Milk Powder, and buyers can conclude new volumes of Butter almost 1 euro per kilogram cheaper than in September this year. Opinions about the market situation for Butter are very divided. Polish producers try to keep the price quite high due to still high raw material prices, and the product they offer is about 40 euros per kilogram more expensive than expected in the EU15.
Cream and SMC
The price of Skimmed Milk Concentrate remains relatively stable compared to other dairy products, while the price of Cream decreased slightly last week. As with other products in this category, the European liquid market was somewhat weaker last week, with supply stable and demand remaining relatively low. The US market remains slightly stronger, but no significant price increases are expected.
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