Dairy Market: Price or Environment, which is More Important? Market Analysis from 10 May 2024
Milk fat and spot milk prices are on the rise; protein concentrates, skimmed milk powder, and feed costs remain stable.
This week saw a so-called 'bridge week' across many parts of Europe, characterised by low trading activity and thus stable prices. The Italian Cibus fair, on the other hand, buzzed with activity and hosted a significant number of visitors, where particularly smaller companies showcased notable innovations in dairy products and cheese.
The development of the spot milk price was dramatic, especially for skimmed milk, which has reached historical lows in recent weeks – with extreme price dips to as low as €0.03. Fortunately, the price has rebounded from this trough and is now over €0.10 for skimmed milk. We expect this price to soon stabilise at around €0.20.
We have also introduced the Kiel Commodity Value ('Kieler Rohstoffwert') into our table, which is assessed monthly and shows a telling development over several months. Since December 2023, this commodity value has decreased by €0.021, which amounts to a 4.8% reduction. Notably, the price for milk fat has risen by €0.011 (an increase of 4.3%), while the price for proteins has dramatically dropped by €0.032 (a fall of 16%).
Given that milk prices continue to be under intense pressure while production costs for farmers and processors are incessantly increasing, a critical juncture has been reached. Further efficiency improvements seem inevitable, but these oftentimes come at the cost of the environment and animal welfare. A drastic course correction at this point is not only desirable but imperative to prevent economic, ecological, and ethical collapses. This crucial shift can only occur through the resolute and constructive cooperation of all stakeholders in the trading and processing industry.
And what about Switzerland?
In Switzerland, the peak of milk deliveries is likely to have been reached. Should temperatures rise promptly, cows will soon move to the Alpine pastures.
However, the economic difficulties of the two major milk powder producers, Cremo and Hochdorf, are not yet resolved. Nonetheless, with general meetings impending, it is anticipated that new information will become available shortly.
Back to the question: Price or Environment, which is More Important?
Despite the urgency to adopt ecological responsibility, the economy relentlessly chases the lowest prices, prompting political countermeasures and the ire of protesting farmers. Taking responsibility now is essential!
Our Outlook for Q2 and Q3:
Although the demand for Cagliata remains below expectations in the South, prices have maintained stability. This indicates a market equilibrium, and an increase in prices is anticipated for the third quarter.
• Cibus Parma, from 7 to 10 May 2024
• PLMA Amsterdam, on 28 and 29 May 2024
• Summer Fancy Food New York, from 23 to 24 June 2024, in partnership with World's Best Cheese
• International Cheese Award, on 27 June 2024
• Sial Paris, from 19 to 23 October 2024, where we'll have our own booth
• Marca Bologna, from 15 to 16 January 2025
• Winter Fancy Food Show Las Vegas, from 19 to 21 January 2025, along with World's Best Cheese
• Sirha Lyon, from 23 to 27 January 2025
• Tutto Food, Milano, 5 – 8 Mai 2025
• Le Mondial du Fromage et des Produits Laitiers in Tours (France), from 14 to 16 September 2025
Best Wishes, Affineur Walo
