Current milk market analysis (Wed Aug 28, 2024)
Milk deliveries in leading producing countries at global level in the 1st half of 2024 remain just under 1% below the previous year. The reduced volumes are largely attributable to the USA and a number of smaller producers; New Zealand was also included for 3 months. In contrast, EU production is +0.9% above the previous year's level. Australia is also growing again to a lesser extent, while New Zealand is stagnating; the dairy year has just started again in both countries.
In the individual EU member states, there is a wide spread in milk production between Austria (+4.3%), Poland (+3.8%) and France (+2.9%) on the one hand and Ireland (-1.3%), the Netherlands (-2%) and Bulgaria (-6.1%) on the other. In Germany, milk deliveries are close to the previous year's level and are currently continuing their seasonal decline.
Dairy products: The reduced supply of raw milk is leading to a global shortage of butter, resulting in prices peaking at around € 6,000/t (Global Dairy Trade Auction in Aug. 24). Skimmed milk powder prices remain at a comparatively good average level due to restrained demand from China. Rising production in the southern hemisphere will not be enough to offset the seasonal decline in the northern hemisphere for the time being.
Theforward prices for the next 6 months show a further upward trend. On the EEX exchange in Leibzig, butter forthe September delivery date is quoted at € 7,747/t and SMP at € 2,553/t, both with an upward trend for the following months of this year. The exchange milk values (ife Kiel) are calculated to be above the 50 ct/kg mark until the end of this year. Stagnating results are forecast for the spring months of 2025.
Actual milk prices paid out to producers in the EU are on average +4% above the previous year's level. Germany (+9%), the Netherlands (+10%), Denmark (+12%) and Ireland (+13%) will achieve above-average results, while Italy (-4%) and Spain (-10%) will have to accept significant losses.
Weekly quotations on the Kempten and Hanover stock exchanges (28.08.2024)
Butter: Quotations for butter (packets and blocks) have been raised again. Declining production and tight stocks are the main influencing factors with very good demand. Export sales are limited, not least due to the high € exchange rate, but are clearly not exerting downward pressure on domestic supply.
Cheese: Cheese prices continue to show a firm trend. Demand is coming up against a limited supply. There are no signs of a fundamental change so far.
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
The persistently low global milk supply below the previous year's level is exacerbating the supply situation, particularly in the butter and cheese sector. In the case of milk powder, restrained Chinese import demand is easing the situation. Milk prices are still on an upward trend, which could continue for the remaining months of the year.
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