Milk Market: On the Brink of a Price Surge? Market Analysis from 14-6-24
Milk Fat and Skim Milk Powder Slightly Declining, Cheese and Spot Milk Prices Stable, Feed Costs and Protein Concentrates Slightly Rising
As anticipated, milk fat has experienced a slight correction at a high level. Unfortunately, the price of skim milk powder has also seen a slight decrease. In Germany, the spot milk price remains stable, while prices in France and Belgium are under pressure.
Feed prices should have risen due to the cold and wet weather, but the opposite has occurred. Wheat prices, in particular, are decreasing because Turkey has imposed an import ban. However, the latest harvest forecasts for Russia and Ukraine are significantly below last year's levels. If the USA also predicts low harvests, prices will rise rapidly.
The Kieler Börsenmilchpreis futures remain optimistic.
In Switzerland:
- Sales of AOP cheeses are stagnating; both Emmentaler and Gruyère are reducing their production volumes.
- The price of silage-free milk is under pressure.
- Milk deliveries in May were above the previous year's level, and deliveries remained high in June.
- Due to the 5% milk price increase effective from 1st July, a milk shortage is not expected this summer, unlike in previous years.
- Following the European elections, the Swiss franc has strengthened further, as investors are sceptical about the European situation.
- Butter stocks are rising, and C-milk is already expected in the autumn.
The Question: On the Brink of a Price Surge?
The market situation is tense, and everyone is waiting for the first supplier to announce prices for the third and fourth quarters. Empty warehouses, reduced milk supplies, stable demand, and poor dairy results call for price increases. But how high will these rises be? Will it be 5%, 10%, 15%, or even 20%? In this situation, it is risky to be the first to declare prices, as it can be suboptimal if set too high or too low.
Our Forecast for Q3 and Q4:
The enthusiasm for rising prices in the third quarter has somewhat waned, possibly due to the rain. However, with the European Football Championship and the Olympic Games ahead, these major events are expected to positively influence demand. Summer will eventually arrive, and there will be a pent-up demand. For these reasons, we anticipate sharply rising prices.
For the fourth quarter, predictions are more challenging. The current weather conditions will dampen milk production, and it is likely that rising prices will persist. The hefty premium currently demanded for fourth-quarter contracts indicates that most market participants share this view. On the other hand, a crisis, war, trade war, financial crisis, etc., could at any time steer the development in the opposite direction.
We will be present at the following trade fairs:
- 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
- PLMA, Amsterdam, 20. & 21. Mai 2025
- Le Mondial du Fromage et des Produits Laitiers in Tours (France), from 14 to 16 September 2025
Best Wishes, Affineur Walo