With the vacation season coming to an end and the associated upturn in business for dairy products, the market remains very firm in all sectors, as shown by the increased prices quoted on the Kempten exchange. For the most part, people have been stocking up at already relatively high prices into the fourth quarter; but those who still need goods now have to add a lot more. This has confirmed expectations that the market will remain firm until almost the end of the year. Hopes of falling prices in view of the recovery in milk production, on the other hand, have proved deceptive. In the EU and North America, we can only speak of a recovery to the extent that the volumes supplied to dairies now exceed the previous year's level, but seasonally they continue to fall for the time being. And it is not only the signals from the world market that confirm the high prices: Butter is more expensive in the EU than in Oceania anyway. The opposite is true for skimmed milk powder: the current supply from Oceania is slightly more expensive than EU goods. This means that the EU product does not have to give way if the powder from New Zealand is offered at a slightly lower price, as happened recently at the last Global Dairy Trade auction. New Zealand is also suffering from a loss of confidence in milk powder and whey products following the revelation of clostridia contamination in whey protein concentrate. Furthermore, most market participants do not yet expect any significant improvement in the supply of milk powder to the international market if New Zealand and Australia enter the market with larger quantities in the near future. This is more likely to occur if milk production in the EU and North America increases again from December. However, the prospects in Europe are mixed: the basic feed supply for dairy cattle in the coming winter is likely to be anything but optimal. However, with significantly higher milk prices, supplementing with concentrated feed will be more attractive than last winter.
