What is Dairy Price tracking?
Effective dairy price tracking refers to the systematic monitoring and analysis of the prices of various dairy products like milk, butter, cheese, and other related products in the market over time.

Why is Dairy Price tracking important?
Dairy price tracking is essential for businesses and stakeholders in the dairy supply chain to navigate a volatile market, optimise resource allocation, and make informed decisions to enhance profitability and sustainability. Understanding the factors influencing dairy prices helps stakeholders implement strategies to mitigate risks and navigate market uncertainties.

In this article, we want to highlight a few nifty strategies for effective dairy price tracking:

1. Utilize Dairy Commodity Intelligence Platforms

Leveraging advanced technologies and data analytics tools is great for effective dairy price tracking, as it provides you with a real-time view of the global dairy market. Commodity intelligence platforms help you track market trends, historical data, and relevant economic indicators, which ensures you get timely and accurate information for informed decision-making. Read this article if you want to get more insights into the top 10 best commodity tools to use in 2024.

Within a commodity intelligence platform, the following data types are interesting to look at for effective dairy price tracking purposes:

  • Milk Production levels: The level of milk production is linked with the price levels of dairy products through the basic economic principles of supply and demand. To forecast the milk production levels, there are five milk production drivers to keep your eye out for: farm-gate milk prices, weather conditions, pasture growth index, and dairy cattle feed and beef prices. This article, gives a deep-dive into these 5 data sets.

  • Valoriation models: valorization models can be used as a predictive instrument for dairy commodity prices.  Vesper’s valorization model, for instance, can guide you in determining the highest yield from 10,000 litres of milk. In practice, when a particular product becomes highly valorized, indicating higher returns, producers can allocate a portion of their milk supply to produce that commodity. Conversely, products with lower valorization might witness reduced production. This mechanism offers valuable insights into the potential supply side of the market, allowing you to discern patterns such as when production increases while prices decrease, or vice versa. In this was, by utilizing valorization data, you can forecast variations in dairy commodity production and anticipate price fluctuations in the upcoming weeks or months. This article illustrates how valorization models work.

  • Historical pricing data: The examination of historical pricing data helps to identify patterns and trends within price movements, and understand market cycles and thus in predicting future price behaviour. Vesper’s platform offers a Historical Settle Per Contract widget, allowing you to monitor at what price prices have been settled on the EEX.

  • Supply and Demand and stock levels: The interplay between supply and demand directly influences prices. When demand outstrips supply, prices tend to rise, and vice versa. The same goes for stock levels, When stocks are high, prices may face downward pressure due to potential oversupply. Conversely, low stock levels may indicate potential scarcity, increasing prices. Examining these data points allows you to identify patterns and trends that contribute to price
    fluctuations.

    If you want to go beyond just looking at current supply and demand dynamics, try using Vesper’s prices, production volumes and stock levels forecasts, which are generated by Mathematical models. This foresight helps in preparing for potential shifts in prices.

  • Pricing indexes: Comparing Industry pricing benchmarks remain crucial in tracking dairy commodity prices. This practice not only reinforces your commitment to accuracy but also promotes informed decision-making. Within the dairy market, market participants often use Futures prices from stock exchanges as a benchmark like EEX, NZX, CME, and SGX, which are a result of market forces such as supply and demand.

    You can also use open-source price indices, such as those provided by government agencies like the United States Department of Agriculture (USDA). These organizations typically collect and publish data on various commodities, including agricultural products, to provide transparency and aid market participants in making informed decisions.

    However, just like futures prices, open-source price indices also have their downfalls. The frequency and timeliness of price releases, for instance, may vary. While government agencies strive to provide up-to-date information, there may be a lag between when the data is collected and publicly available. Additionally, the coverage of the indices may only encompass some market participants or regions. Depending on the specific index or report, it may focus on specific commodities or geographic areas.

    To address this, we’ve introduced the Vesper Price Index (VPI) – an independent pricing index exclusively available on Vesper. The VPI is based on pricing input carefully curated from respected market players, including buyers, sellers, traders and brokers. We ensure we receive inputs from all sides of the market, ruling out outliers, to provide a benchmark price that accurately reflects the market.

    In this article, we explain How Vesper’s Independent Pricing Index has helped thousands of agricultural commodity market players make smarter trading decisions. 

  • Market analyses: In stead of doing the market analyses yourself, we can advice consulting ready-made market analyses for dairy price tracking, as they give a more holistic view of the industry. Market analyses help identify trends in supply, demand, and pricing within the dairy industry. This includes understanding seasonal variations, consumer preferences, and global economic factors that impact the market.

    To provide you with timely and comprehensive market analyses, Vesper has partnered with industry experts such as Shyyple, Daily Dairy Report, SouthDairy Trade, NZX,  Grienfields, Eucolait,  and others to deliver detailed analyses on various topics, including weather, shipping, region-specific content, and more.

    Besides partnership analyses, Vesper publishes proprietary analyses, also known as ‘Vesper Highlights’. Vesper Highlights are produced by our in-house analysts, who connect with industry players worldwide, combining on-the-ground insights with solid data to provide a clear, unbiased commentary. Vesper’s Highlights, through their comprehensive analysis of industry trends and economic factors, equip procurement managers with the insights needed to anticipate price fluctuations. For Dairy, Vesper publishes highlights on Cheeses like mozzarella, gouda, cheddar, and Emmental, and on Butter and Powders like SWP, Whey Powder, WPC, WPI and Whey Permeate. 


2. Establish Strategic Partnerships

Building strong relationships with key stakeholders, such as suppliers, distributors, industry experts, or other market participants, provides access to valuable and timely information, as industry insiders often possess first-hand knowledge of market dynamics, pricing trends, and other factors influencing commodity prices. These relationships can facilitate the exchange of insights, trends, and market intelligence that may not be readily available through public sources or commodity intelligence platforms, which is great for effective dairy price tracking.

Close relationships with suppliers and distributors furthermore allow for more timely updates on changes in supply chains, production capacities, and potential disruptions. This information is critical for accurately assessing commodities’ current and future availability and understanding how it may impact pricing.

Below, a few tips and trips on how to keep in contact with other dairy professionals:


3. Follow trustworthy news sources

News outlets serve as invaluable tools in the quest for effective dairy price tracking, as they offer a comprehensive view of the industry landscape.

Why?

  • Firstly, these platforms shed light on policy changes, regulations, and trade agreements within the dairy sector. By reporting on such developments, they enable stakeholders to anticipate how these changes may impact the pricing of dairy commodities.

  • Dairy is a market influenced by consumer preferences, and news platforms recognize this fact. They delve into consumer trends and preferences related to dairy products, helping stakeholders anticipate shifts in demand and thus pricing.

  • Moreover, news reports extend their coverage to supply chain disruptions, trade dynamics, and logistics challenges. These reports offer early warnings for stakeholders, allowing them to make timely strategic adjustments. Whether it’s coping with supply chain hiccups or navigating the complexities of global trade, these insights are indispensable.

  • Beyond the numbers and facts, news platforms also capture the essence of market sentiment. They provide a platform for expert opinions and reactions, offering insights into how perceptions might influence dairy prices. Understanding the psychology of the market is often as critical as the data itself.

With loads of options available, individuals can easily find a news source that suits their specific needs, be it global or regional coverage, economic insights, or information on specific dairy commodities. To give you a head start, here are some reliable dairy news sources to check out: Dairy Industry Newsletter, Dairy Reporter, Dairy Foods, Dairy Herd Management, USDA, The Dairy News Global, Dairy News 7×7.

In this article, we’ve also up the top 10 most reliable and free commodity market news outlets from various regions, which also include news on dairy market trends.

If you want to stay informed on all dairy news within one view, Vesper’s in-house AI team have developed a machine learning model that filters through an extensive database of news sources, bringing you more frequent and varied updates on the Dairy market. We’ve recently n broadened our news coverage to encompass a more comprehensive range of Dairy news including the following Regions: Netherlands, Ireland, France, Germany, New Zealand, United States, Latin America, India and Global, and the following Product categories: Liquid milk, milk powders and fats, cheeses, whey powders, and whey derivatives.

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