Heavy late summer storm sweeps over dairy market

The dairy market took a hit last week, this week a heavy storm swept over the market, particularly affecting milk fat once again. However, it did not stop there. The cheese prices also took hard hits, and even the milk powders had to concede significantly. An enormous amount of value went up in smoke. For buyers still needing to make deals, it comes as a bonus, but for sellers and parties who have purchased relatively recently, it feels bitter. For some products, the price dropped by 10 or 12% in just one week. The biggest price drop was seen this week in cream, with the DCA quotation plummeting nearly 12% this week. The butter trade was also rough, with this week seeing a decrease of more than 6% in the quotation. A quotation naturally gives a kind of average, around which there is large variation in a week like this. According to reports, Danish/Swedish butter from a large producer was the lowest bidder this week at €5550 per ton, but butter was still sold for €800 or €900 per ton more. Such price differences and the enormous price drops in a short time again create fertile ground for disputes between buyers and sellers. There is always someone feeling shortchanged. DisputesFor dairy farmers, who will also feel the effects of the battleground in the commodity market, resolving disputes will not be easy. Sooner or later, they will be presented with the outcome of what has happened in the dairy market these weeks. The milk price is dropping slightly but is increasingly moving above the commodity market. Although butter and cream prices have the most impact on the valuation of milk, the powder prices also received a sensitive blow downwards this week, even though they are already relatively low at bottom levels. The quotation for skim milk concentrate also dropped sharply, although it had seemed to hold firm until last week. This week, almost 8% was taken off the price. Nevertheless, that is still not enough to produce milk powder profitably at this time. The cheese market also maintained its downward trajectory, although the rate of price decrease this week was slightly lower than with milk fat and concentrate. The quotation of most cheese prices decreased by a few percent, except for natural cheese. Its quotation fell by a sensitive 11.5%. A small consolation for cheese producers is the unwavering strong demand for whey. The quotation for whey concentrate rose by almost 7%, being one of the few that increased. It is notable that the quotation for raw milk in the Netherlands remains relatively strong (€47.50), while the Northern German quotation has dropped much further in recent weeks and now barely stands at €40.00. Overreaction? According to various parties, the price drops this week are an overreaction from the market and a result of herd behavior. A correction should follow, as production and stocks in Europe are being overestimated. In the coming weeks, it should become clear whether such a correction is possible. Currently, there is little indication of any price rebound.