Milk supply remains tight
Milk supply in Germany has fallen further in recent weeks. Experience shows that the seasonal downward trend will continue in the coming weeks until October.
Production in the individual EU countries varies greatly: significant downward trends can be observed in Ireland (-6.5%), the Netherlands (-2%) and Denmark (-1%). In contrast, Poland, Austria, Italy and Spain are growing by between +2% and +4%.
In the major production regions at a global level, milk deliveries have been below the previous year's level for months, although the difference narrowed slightly in June. A slight increase in the EU and Australia contributed to this. In contrast, delivery volumes in the USA and a majority of smaller producing countries, with a focus on Argentina (-12%), remain below the same month last year.
The most recent GDT auction on 20 Aug.2024 delivered an average result of +5.5 %. The main contributors to this were whole milk powder (+7.2 %) and concentrated butter (+4.7 %). The repeated high sales volume of around 35,000 tons, just below the record level, suggests strong global demand. The delivery months from Nov. 24 to Jan. 25 saw the highest price increases, signaling that the supply situation is likely to remain tight, with corresponding price expectations.
The exchange prices on the EEX-Leibzig are quoted at a stable €7,300/t butter and €2,420/t SMP for the front month. Price increases are being traded for the following dates. On the Chicago Exchange, butter prices reached the equivalent of around €6,300/t and SMP €2,460/t at an unstable to weak dollar exchange rate.
The Kiel exchange milk values calculated from butter and SMP exchange prices provide prices slightly above 50 ct/kg for the months from Sep.24 to Apr.25. Rising butter prices form the decisive basis for this, but the upward trend in SMP prices also helps.
Butter: The short supply is keeping butter prices high. Block butter is now valued higher than packet butter. Stocks remain limited. Butter prices continued to rise in international trade.
Cheese: Quotations for cheese continue to show a firm trend. Domestic and international demand is being met with limited supply. The comparatively long production/maturing period is slowing down a rapid supply response.
Milk powder: In Germany, prices remain relatively stable for the time being. However, there is upward movement in international trade. Exports are raising expectations of moderate price increases.
ZMP Live Expert Opinion
Milk deliveries, which have so far been below the previous year's level, have contributed to a tight supply situation both nationally and globally. Prices for milk and dairy products are correspondingly high. Stocks are comparatively low. In the coming weeks, further seasonal low to falling milk deliveries are to be expected in the northern hemisphere. Although the current dairy year in the southern hemisphere will bring increases, they will hardly be enough to compensate for the current deficit. The high GDT auction results for the coming delivery months underpin this assessment.
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