Our Market Analysts are currently hearing a prevailing sentiment among dairy industry players. They are finding it hard to believe that prices for milk powders will remain around the current price level of $2350/mt (Fig. 1), given the consensus that most buyers are already covered until the end of 2023.

Small tip: Utilise our no-cost dairy calculators to, for instance, work out the price for whole milk powder.

Fig. 1: Price comparison for SMP and WMP between Europe and Oceania

The expectation is that Europe will have an excess of dairy volumes on their hands, while New Zealand is expected to come in with a lot of (unwanted) additional volume of dairy products on the global market.

This situation has led to a large number of sellers fighting for buyers who are not looking for additional volumes in the fourth quarter, meaning that all (or at least a lot of) business will be carried over into Q1 next year. With a generous of product available, it is expected that the lack of demand and, thus, trade activity will exert downward pressure on prices until the end of this year.

Regarding the current commodity prices, we’re not sure how the current commodity prices rhyme with milk prices of over €0,40/kg, “Either milk prices should go down or commodity prices should go up, but I don’t know how”, a ‘Dutch-based Dairy trader’ said.

there is uncertainty about how they align with milk prices exceeding €0.40/kg. As one Dutch-based dairy trader succinctly puts it, “Either milk prices need to decrease or commodity prices need to rise, but it’s unclear how this will play out.”

However, in a market where limited trading activity is anticipated in the final quarter of the year, it will require some time to evaluate these speculations.

Fig. 2: Long and short-tem sentiment for the Butter and Whey market


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