In this week’s dairy market update, the Global Dairy Trade (GDT) event and Vesper Price Index confirmed the stable sentiment that has been around for several weeks. Buyers were hoping to secure lower-priced dairy products towards the end of 2023, perhaps even finding bargains on perishable items or reduced prices on liquids post-Christmas.
However, the expected price drop in liquid dairy products during the typically quiet period after Christmas did not materialise as much as forecasted. According to the latest Vesper Price Index, see Figure 1, cream prices did not drop below €6000/mt, while SMC remained around the €2000/mt mark. Interestingly, although there was notable fluctuation in spot raw milk prices across the European Union, with figures ranging from €340 to €400/mt, this volatility did not lead to lower prices for dairy commodities overall.
Figure 1: Vesper Price Index – Week 1
The market for whey is kept in its grasp by either high demand for higher proteins or low demand for ‘lower proteins’. For products like SWP, whey permeate, and lactose, low demand seems to keep prices at historically low or average prices. Lower production for those products is timed quite well, keeping those markets stable.
Looking ahead at the coming months, the market for high-protein dairy products like WPC80 and WPI seems to be about finding a balance. Some facilities have increased their production, while demand is slowing down seasonally after the big Q4 spike. Adding the fact that many think that the current price levels for WPC80 and WPI are “too high” and these markets are very thin to begin with, finding the right balance between supply and demand is difficult but important. If the two sides of the WPC80 and/or WPI market manage to find the right balance, there is no need for prices to fall drastically again.
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