Market Report 7-4-23 Is the milk bubble going to burst?
The 8th week of stable prices.
Stable, calm markets for 8 weeks. A closer look at the 8 weeks shows that some products have consistently lost slightly, winners are not to be found. A few examples-Mozzarella from a high of € 3.10 to € 3.03, Gouda from € 3.23 to € 3.14, milk fat from € 5.35 to € 5.00, skimmed milk powder from € 2.60 to € 2.35, the spot milk price from € 0.38 to € 0.29. The pay-out milk price from over € 0.60 to € 0.43 - € 0.45.
Cheese prices were again inconsistent. Demand has weakened, most customers have closed for Q2. However, there are still producers hoping for better prices. If they have storage capacity to wait until September, the speculation could work out, otherwise they will be stuck with the storage costs.
China seems to be buying now, but the rest of the world has said goodbye. Transport prices have plummeted massively. This is supporting prices in Europe, and it clearly shows that we are moving towards recession.
and in Switzerland?
Milk prices continue to be stable at a high level. The reasons for this are primarily that the Swiss milk market is protected. Only in cheese Switzerland has free trade with Europe.
Swiss cheese exports were disastrous in the first 2 months. Read our report on cheese exports with the latest February 23 figures: https://www.affineurwalo.ch/en/news/swiss-cheese-winning-model
There is speculation in Switzerland now that the milk price will drop by CHF 0.03 on 1 July. I wouldn't count too much on it.
To the question: Is the milk bubble finally bursting?
There is too much milk, there is too much milk powder, there is too much butter. Only the cheese stocks are in balance.
The situation can be compared to a powder barrel, we are all sitting on it and hoping that no one will find the detonator. If the milk flows into cheese production instead of milk powder, we will see new lows for cheese and a milk price of around € 0.30.
Kind regards, Affineur Walo
