Dairy Market: Where are the Bulls? Market Analysis from 5 July 2024
Cheese, skimmed milk powder, and protein concentrates are falling, while spot milk, feed costs, and protein concentrates remain stable. Milk fat is on the rise.
Review and Current Situation
In our newsletter from 21 June 2024, we questioned whether a summer downturn was imminent. Two weeks later, with falling prices, it is clear that bulls are scarce. Prices have declined both in Europe and at this week's GDT event. The GDT index saw a drop of 6.9%, the largest decline since August of last year. Particularly affected was anhydrous milk fat (AMF), with a decrease of 10.7%, followed by cheese (Cheddar) at 6.9%, and skimmed milk powder at 6.1%.
Situation in Switzerland
- Milk Prices: Despite overstocked inventories, milk prices were increased by 5% as of 1 July 2024.
- AOP Cheeses: Market shares of AOP cheeses continue to shrink, with the situation particularly precarious for Emmental. Concurrently, surprisingly low prices for cave-aged Gruyère were discovered in the USA.
- Demand: Demand remains subdued as oversupply and distress sales at dumping prices have unsettled customers.
The Question: Where are the Bulls?
Our hope is that they are on holiday and will return refreshed in August before the bears awaken. The pressure seems to be coming particularly from Northern Europe, where the price of Gouda has been declining for some time. The constant overproduction in these regions was supposed to be addressed by the "Green Deal". However, with the growing influence of right-wing parties in Europe, this plan is likely to be weakened. The Green Deal envisaged adjusting the number of cows to the available land, which would have drastically reduced the cattle population in the Netherlands.
Forecast for Q3 and Q4
Following the slight price increase of around 5% at the beginning of July in Europe, we expect stable prices for Q3.
The outlook for Q4 is currently difficult to assess. Production data and weather conditions point more towards a bull market, while recent figures and market perceptions lean more towards a bear market.
In this uncertain situation, it is advisable to hedge 50% and wait to see how the market develops.
We will be present at the following trade fairs:
- Sial, Paris, 19–23 October 2024, with our own stand
- Marca, Bologna, 15–16 January 2025
- Winter Fancy Food Show, Las Vegas, 19–21 January 2025, with our partner World's Best Cheese
- Sirha, Lyon, 23–27 January 2025
- Tutto Food, Milan, 5–8 May 2025
- PLMA, Amsterdam, 20 & 21 May 2025
- International Cheese Awards 2025
- Summer Fancy Food, New York, 29 June – 1 July 2024, with our partner World's Best Cheese
- Le Mondial du Fromage et Produits Laitiers, Tours (France), 14–16 September 2025
Best Wishes, Affineur Walo
