Milk Market: Sky-high Prices in Q3? Market Analysis from 31-5-24
Spot milk prices are rising sharply; milk fat, skim milk powder, protein concentrates, and cheese are also on the rise, feed costs are slightly increasing, and the spot milk price remains stable.
This week has been somewhat quieter, yet the upward trend continues. Some market participants in the milk fat sector believe that peak levels have been reached and a downward correction may be possible.
The PLMA trade fair took place in Amsterdam this week and was, as usual, well attended. Most exhibitors were more optimistic compared to last year.
There are rumours that China might impose tariffs on pork and dairy products from the EU in response to the planned tariffs on Chinese electric cars. This could trigger a crisis in the European dairy market, like the one caused by sanctions from Russia.
What is the situation in Switzerland?
Currently, it is very quiet, but the declining trend in cheese sales continues. A new price war seems to be looming, especially for Emmental cheese.
The Swiss franc has regained strength after a period of weakness.
Newlat, which has a stake in Hochdorf, has acquired a company in England from Mitsubishi. In return, Mitsubishi has acquired a 20% stake in Newlat. The impact this will have on Newlat's Swiss strategy remains to be seen.
We quote the press release:
"The Italian food group Newlat has acquired the UK-based Princes Group from Mitsubishi Corporation for 892 million euros. The acquisition will expand Newlat's product range to include Prince’s canned fish, Napolina sauces, and other brands such as Flora and Branston, making the company the largest food company on the Milan Stock Exchange and the first Milanese food start-up to reach the billion-euro mark. Mitsubishi will retain 21.2% of the company, which will operate under the new name 'New Princes,' while Newlat will own 44%. The deal is expected to boost Newlat's revenue to around 2.8 billion euros, with a forecast to increase to 5 billion euros by 2030. Princes was founded in Liverpool in 1880 and was acquired by Mitsubishi in 1989. The acquisition is expected to be completed by the end of July."
To the Question of Sky-high Prices in Q3?
The price increases of recent weeks have raised high expectations. However, futures for the third quarter have slightly declined over the past week, likely due to rumours of tariffs and weaker economic data from the USA.
Our Forecast for Q2 and Q3:
We expect the upward trend to slow down. While there is still some catching up to do with cheese, a correction for butter is likely in the coming weeks.
Many market participants are wondering where prices will lie in the third quarter. Our specific forecast predicts the price for semi-hard cheese at around €4.50/kg, for milk over €0.50/kg, and for milk fat at €7.50/kg.
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
