Ample supply and processing problems push liquid dairy into long lasting low

While the prices for solid dairy and for milkfat are recovering strongly, the market for raw milk/spot milk and alsof or SMC remains at an unusually protracted low. Falling liquid dairy prices around Christmas and New Year do occur still regularly, but to find analogues fort he current situation we have to go ten years back. The basic problem now is that the milk supply is and remains abundant. Farm gate milk prices have gone down a lot since the autumn of last year, but farmers haven felt the urge to cut milk production. Meanwhile, milk production may still be on its way to reach its seasonal peak, but in many European countries the Blue Tongue (BTV) infection has disturbed the biological rhytm on farms. So, what does the production cycle do? In some countries it is clear to a certain extent. Irish supply is coming up, but how is the situation elsewhere. One thing is clear: The total milk supply in Europe remains high for now. That effects the spot milk prices.In France the prices are even lower than in Germany and the Netherlands. Looking at the next processing stage, we see that the cream price is going up, although in a very volatile pattern. Skimmed milk is worth almost nothing on the other hand. It is too expensive to be transported over longer distances. In many cases producers have to pay to discard of it. Skimmed Milk Concentrates are doing a bit better, but are also not fetching the price they would in previous years. Potentially SMC could be much higher priced, were it not for the lack of processing capacity. While SMC sells at less than €700 a tonne of dry matter, while SMP is being sold at almost €2000 more, someone is not reaping the gains. The bottleneck is the drying capacity, it is said. But is it capacity or allocation?