Heat and Demand for Butter Drive Milk Prices Upward
Source: DairyNews.today
The rise in purchase prices in Ukraine has been influenced by a reduction in milk production and an increase in both prices and demand for butter in international markets, reports Georgiy Kukhaleyshvili, an analyst for the Association of Milk Producers.
As of August 27, the average purchase price for extra-grade milk was 15.20 UAH/kg excluding VAT, which is 1.08 UAH more than a month ago. The price range for this grade in farms varies fr om 14.00 to 16.00 UAH/kg excluding VAT. The upper lim it of the price range has increased by 1.40 UAH over the past month, while the lower limit has risen by 40 kopecks.
The higher-grade milk averages 15.20 UAH/kg excluding VAT (+1.08 UAH). Prices for higher-grade milk range fr om 14.00 to 16.00 UAH/kg excluding VAT. Compared to the monitoring results of the second half of July, the upper lim it of the price range has increased by 1.40 UAH, and the lower limit has risen by 40 kopecks.
The average price for first-grade milk reached 13.97 UAH/kg excluding VAT, which is 77 kopecks more compared to the price in the second half of July. The minimum price in farms was 12.65 UAH/kg, while the maximum price was 14.50 UAH/kg. Over the past month, the lower limit of the price range remained unchanged, while the upper limit increased by 45 kopecks.
As a result, the weighted average price of the three grades reached 14.79 UAH/kg excluding VAT, which is 98 kopecks more than a month ago.
Georgiy Kukhaleyshvili notes that raw milk continues to increase in price as milk yields decline and demand from dairy processing companies exceeds supply in the domestic market. Since the end of June, Ukraine has experienced intense heat. According to the Ukrainian Hydrometeorological Center, hot and almost dry weather prevailed across the country until the end of the second decade of August, with maximum daytime temperatures reaching +35-38°C. Prolonged power outages due to missile strikes by Russian occupiers on energy infrastructure led to disruptions in the operation of ventilation systems at dairy farms. Cows suffered from heat stress, which affected productivity. Notably, the massive missile strikes on August 26 across 15 regions led to emergency power outages.
The rise in purchase prices is also supported by high butter prices in export markets amid a global fat shortage and declining milk yields in Europe, the USA, and Oceania, as well as the devaluation of the hryvnia. Ukraine is increasing its butter exports, which drives demand for raw milk from processors and pushes prices upward. However, despite rising purchase prices, the profitability of butter production in Ukraine has improved. Over the past month, spot milk prices have increased by 1.65 UAH. Since spot prices for milk include delivery costs, they are likely to continue rising from the second half of September when logistics costs are expected to increase due to the rise in excise duty on imported fuel.
In early September, a further increase in purchase prices is likely due to high demand from processors, a shortage of raw milk, and the prospect of higher logistics costs. Price stabilization for raw milk is expected in the fourth quarter. Typically, during the New Year holidays, there is a lull in the dairy market, and demand for milk decreases. In the future, a reduction in the consumption of butter and other dairy products in Ukraine is likely due to excessively high prices, which will also affect demand and prices for milk.
Press Service of the Association of Milk Producers
The higher-grade milk averages 15.20 UAH/kg excluding VAT (+1.08 UAH). Prices for higher-grade milk range fr om 14.00 to 16.00 UAH/kg excluding VAT. Compared to the monitoring results of the second half of July, the upper lim it of the price range has increased by 1.40 UAH, and the lower limit has risen by 40 kopecks.
The average price for first-grade milk reached 13.97 UAH/kg excluding VAT, which is 77 kopecks more compared to the price in the second half of July. The minimum price in farms was 12.65 UAH/kg, while the maximum price was 14.50 UAH/kg. Over the past month, the lower limit of the price range remained unchanged, while the upper limit increased by 45 kopecks.
As a result, the weighted average price of the three grades reached 14.79 UAH/kg excluding VAT, which is 98 kopecks more than a month ago.
Georgiy Kukhaleyshvili notes that raw milk continues to increase in price as milk yields decline and demand from dairy processing companies exceeds supply in the domestic market. Since the end of June, Ukraine has experienced intense heat. According to the Ukrainian Hydrometeorological Center, hot and almost dry weather prevailed across the country until the end of the second decade of August, with maximum daytime temperatures reaching +35-38°C. Prolonged power outages due to missile strikes by Russian occupiers on energy infrastructure led to disruptions in the operation of ventilation systems at dairy farms. Cows suffered from heat stress, which affected productivity. Notably, the massive missile strikes on August 26 across 15 regions led to emergency power outages.
The rise in purchase prices is also supported by high butter prices in export markets amid a global fat shortage and declining milk yields in Europe, the USA, and Oceania, as well as the devaluation of the hryvnia. Ukraine is increasing its butter exports, which drives demand for raw milk from processors and pushes prices upward. However, despite rising purchase prices, the profitability of butter production in Ukraine has improved. Over the past month, spot milk prices have increased by 1.65 UAH. Since spot prices for milk include delivery costs, they are likely to continue rising from the second half of September when logistics costs are expected to increase due to the rise in excise duty on imported fuel.
In early September, a further increase in purchase prices is likely due to high demand from processors, a shortage of raw milk, and the prospect of higher logistics costs. Price stabilization for raw milk is expected in the fourth quarter. Typically, during the New Year holidays, there is a lull in the dairy market, and demand for milk decreases. In the future, a reduction in the consumption of butter and other dairy products in Ukraine is likely due to excessively high prices, which will also affect demand and prices for milk.
Press Service of the Association of Milk Producers
23.09.2024
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