Milk prices paid to producers continued the rise that started in spring, contrary to the normal seasonal trend in spring, by continuing to rise rapidly - also contrary to the usual seasonal trend. According to an initial assessment by the AMI, the national average price paid for milk delivered to dairies in July was 37.5Ct/kg with 4.0% fat and 3.4% protein, which was 1.0Ct more than for June deliveries and 8.2Ct more than a year earlier. In previous years, even higher prices had only been achieved in the period from September 2007 to January 2008.
The recent increase, which exceeds the usual seasonal level, is continuing, meaning that further increases can also be expected for August and the following months. This means that milk prices continue to follow the upward trend of the Kiel commodity value calculated by the IFE Institute. This had climbed to 44.9Ct/kg in August. The time lag compared to this indicator is due to longer contract periods, which are particularly important for items for the food retail trade such as small packaged butter, cheese, drinking milk and fresh dairy products, but not only for these. However, farm-gate prices are also likely to pass the 40Ct hurdle by late fall. It is unlikely that farm-gate prices will fully follow the value of raw milk, but the difference in this phase of the high price cycle is likely to be lower than in 2007. This is because it was possible to convince buyers of small packaged butter, cheese, drinking milk and fresh products of higher prices early on this year. Nevertheless, the prices for these products are now lower than those for industrial milk products again, after these have continued to rise, as can be seen from the raw material value. Further price increases will therefore be unavoidable. However, pricing policy is now likely to be characterized by more caution on all sides. After all, it is nothing new for consumers to react with restraint. In addition, the consumer climate in Germany has also cooled somewhat in the meantime. In the discussion about the accelerating rise in the cost of living, the focus has shifted from energy to food, including butter and milk. It therefore remains to be seen whether the further price adjustments for retail items in the dairy sector will fully reflect what has now happened with loose butter and skimmed milk powder. It also remains to be seen whether milk farm-gate prices will follow the sharp upward price swings. In recent years, they have never fully followed the price highs and lows indicated by the raw milk value.
