Pressure on liquid dairy prices continues

The DCA benchmark for Dutch spot milk has been above the level of the payment prices since mid-July. However, as Christmas approaches rapidly, little remains of the premium that buyers have been willing to pay for spot milk all this time. This week also sees a decrease in the benchmarks for cream and skimmed milk concentrate. The price declines in the liquid dairy market are not very surprising. This year, the holidays fall in the middle of the week, which is logistically very unfavorable. It is also noticeable that the liquid supply is increasing again, as the milk supply in Northwestern Europe is seasonally on the rise. Spot milk equal to Guarantee price The benchmark for Dutch spot milk already fell below the €60 threshold last week and further drops this week to €57.50 per 100 kilograms. This is almost entirely in line with the FrieslandCampina guarantee price in December and also close to the milk prices at other processors. Presumably, spot milk prices will further decline below the payment prices in the coming weeks, which seem to be at their peak. It is unlikely that milk prices will continue to rise in the new year, as was the trend for almost all of 2024. The dairy market is under considerable pressure. Particularly the butter market (and to a lesser extent the cheese market) has to give in significantly this week. This significantly reduces the raw material value of milk. The combination of more milk and weaker demand in the first quarter does not bode well for market sentiment. As long as the decline in the coming weeks is not too steep, this does not pose a major threat to the payment prices in 2025. Two years ago, it was a different story when milk prices crashed significantly after the turn of the year. Such a scenario does not seem to be emerging for now. Considering the sky-high manure prices, this is somewhat reassuring for Dutch dairy farmers.Cream below €10,000 per tonThe pressure on butter prices pushes the DCA cream benchmark back to €9,800 per ton. This ends a four-week period of prices above the €10,000 per ton threshold, a level that had never been reached in the past. Market prices of €9,500 per ton are mentioned for the broken weeks at the end of December. Skimmed milk concentrate also does not escape the price pressure and drops below €2,200 per ton this week.