As you might expect, European prices for all dairy liquids, such as raw milk, cream, SMC, and whey concentrate, are feeling more pressure during the milk flush than before. Cream is the one product which price is very volatile but still high, driven by the good demand and low butter supply in all regions.
Completely on the other side of the expensive vs cheap spectrum, there is SMC. SMC prices throughout Europe decreased as far as €1130/mt these days, with seemingly very few buyers interested or able to buy more than they currently do. In the peak month of milk production, SMC prices have no other way to go than down.
This is improving the profitability of SMP production significantly, even though most production capacity is likely already full (also one of the main reasons why SMC prices are pushed down in the milk flush).
The historically low prices we see today are triggering more buyers to step in and try to cover volumes for Q3 and Q4 this year, while suppliers aren’t too happy to sell forward at these prices.
Figure 1: Price comparison between SMC – SMP in EUR/mt
Raw milk is stuck in the middle, but it’s even more interesting. Prices for raw milk in Germany, the Netherlands, and France are rarely the same, but also rarely this far apart. Seemingly lower milk intake in the Netherlands has driven spot prices for milk to €360/mt, while the good milk production numbers in Germany and France are keeping prices at €310 and €320/mt, respectively.
Cheaper milk in the flush is usual, but the difference between the Netherlands and Germany, especially, does spark some interest. Prices of €310/mt could lead to cheaper dairy commodities coming from the biggest producing regions within Europe, especially since low spot milk prices historically stick around for at least another month.
