Stabilization of demand led to a slight decrease in milk prices in the EU
Source: The DairyNews
In February 2024, raw milk prices in the EU slightly decreased due to a certain increase in the supply of raw milk in the domestic market, stabilization of demand for butter, and a reduction in interest from foreign buyers for dry milk.
However, procurement prices may be reviewed upwards again in preparation for Easter, when businesses will need more milk, and with the onset of summer heat when milk yields may decrease, - reports analyst Georgiy Kukhaleishvili fr om the Milk Producers Association.
According to preliminary data from the European Commission, in February 2024, the average price of raw milk in the EU was 46.34 euro cents per kg, which is 0.8% lower than in January. Compared to February 2023, milk in the EU became cheaper by 15.1%. In Ukraine, last month, raw milk averaged 40.00 euro cents per kg.
Compared to January of the current year, the price of raw milk increased in 8 EU member countries. Among the major producers and exporters of dairy products, prices for raw materials increased only in Poland to 47.86 euro cents per kg (+0.5%), compared to January 2024, however, this is partly due to cooperative payments to raw material suppliers.
In February, procurement prices remained unchanged in Germany, Denmark, Spain, Italy, Portugal, Hungary, Slovenia, Malta, and Cyprus, compared to January. Compared to January 2024, raw milk became cheaper in the Czech Republic to 42.48 euro cents per kg (-2%), France to 45.96 euro cents per kg (-2.3%), Lithuania to 42.68 euro cents per kg (-2.9%), the Netherlands to 44.75 euro cents per kg (-3.5%), and Slovakia to 42.01 euro cents per kg (-4.7%).
Traditionally, the most expensive raw milk is in Cyprus (64.91 euro cents per kg), Malta (56.32 euro cents per kg), and Greece (52.70 euro cents per kg). The lowest milk prices are received by farmers in Latvia (39.38 euro cents per kg) and Slovakia (42.01 euro cents per kg).
Compared to February 2023, raw milk prices increased only in Latvia (+13.6%) and Lithuania (+13.7%).
Georgiy Kukhaleishvili notes that European farmers are not satisfied with the procurement prices offered by dairy processing companies. In February, Spain, Italy, Belgium, the Netherlands, and several other countries saw protests against low prices for raw milk, reductions in certain tax benefits, and subsidies for farmers. The president of the "Association of Independent Milk Producers" Adrien Lefèvre reported that many farmers consider current prices too low to cover production costs. In his opinion, price manipulation by corporations and state policy influence pricing. An alternative point of view is held by Arthur Firnall, a member of the board of directors of the dairy cooperative Arla Foods, wh ere a decision was made not to review milk prices. Firnall justifies the cooperative's decision with seasonal increases in milk yields in the EU and stabilization of milk demand in external markets.
According to USDA data, in February, there was an increase in milk production volumes in Central and Eastern European countries, including Poland, as well as in Germany and France, which are considered some of the largest milk producers in the EU. The increase in milk production volumes was due to heavy precipitation at the beginning of the year, which contributed to soil moisture enrichment, increased pastures, and the availability of cheap feed. In February, demand for dairy products in Europe stabilized. In particular, wholesale demand for cheese slowed down. By mid-February, prices for butter decreased, and wholesale and retail sales decreased. Almost until the beginning of March, there was quite a sluggish demand for skimmed milk powder and whole milk powder on the European market.
Dairy processing companies did not even produce new batches of skimmed milk powder but sent raw materials for cheese production, which was actively sold in supermarkets in February. Complications in shipping through the Suez Canal, due to shelling by Yemeni Houthi rebels of commercial transports, created obstacles to the delivery of European butter and cheese to external markets. By the end of February, there was a decrease in demand for skimmed milk powder and whole milk powder on external markets, as most buyers had already made their purchases. In February, European companies replenished warehouse stocks of butter and cheese and were interested in cheap raw materials.
However, a significant collapse in milk prices in Europe is unlikely in 2024. In the short term, a probable increase in raw milk prices in the EU in case of a slowdown in milk production volumes. Weather factors, a shortage of new labor in farms, the exit of certain dairy farmers from the industry due to reduced profits and production profitability may influence the reduction in milk production volumes in Europe. Market operators expect an increase in demand for raw milk from processors in preparation for Easter, which may also contribute to an increase in procurement prices in the short term.
Press service of the Milk Producers Association
According to preliminary data from the European Commission, in February 2024, the average price of raw milk in the EU was 46.34 euro cents per kg, which is 0.8% lower than in January. Compared to February 2023, milk in the EU became cheaper by 15.1%. In Ukraine, last month, raw milk averaged 40.00 euro cents per kg.
Compared to January of the current year, the price of raw milk increased in 8 EU member countries. Among the major producers and exporters of dairy products, prices for raw materials increased only in Poland to 47.86 euro cents per kg (+0.5%), compared to January 2024, however, this is partly due to cooperative payments to raw material suppliers.
In February, procurement prices remained unchanged in Germany, Denmark, Spain, Italy, Portugal, Hungary, Slovenia, Malta, and Cyprus, compared to January. Compared to January 2024, raw milk became cheaper in the Czech Republic to 42.48 euro cents per kg (-2%), France to 45.96 euro cents per kg (-2.3%), Lithuania to 42.68 euro cents per kg (-2.9%), the Netherlands to 44.75 euro cents per kg (-3.5%), and Slovakia to 42.01 euro cents per kg (-4.7%).
Traditionally, the most expensive raw milk is in Cyprus (64.91 euro cents per kg), Malta (56.32 euro cents per kg), and Greece (52.70 euro cents per kg). The lowest milk prices are received by farmers in Latvia (39.38 euro cents per kg) and Slovakia (42.01 euro cents per kg).
Compared to February 2023, raw milk prices increased only in Latvia (+13.6%) and Lithuania (+13.7%).
Georgiy Kukhaleishvili notes that European farmers are not satisfied with the procurement prices offered by dairy processing companies. In February, Spain, Italy, Belgium, the Netherlands, and several other countries saw protests against low prices for raw milk, reductions in certain tax benefits, and subsidies for farmers. The president of the "Association of Independent Milk Producers" Adrien Lefèvre reported that many farmers consider current prices too low to cover production costs. In his opinion, price manipulation by corporations and state policy influence pricing. An alternative point of view is held by Arthur Firnall, a member of the board of directors of the dairy cooperative Arla Foods, wh ere a decision was made not to review milk prices. Firnall justifies the cooperative's decision with seasonal increases in milk yields in the EU and stabilization of milk demand in external markets.
According to USDA data, in February, there was an increase in milk production volumes in Central and Eastern European countries, including Poland, as well as in Germany and France, which are considered some of the largest milk producers in the EU. The increase in milk production volumes was due to heavy precipitation at the beginning of the year, which contributed to soil moisture enrichment, increased pastures, and the availability of cheap feed. In February, demand for dairy products in Europe stabilized. In particular, wholesale demand for cheese slowed down. By mid-February, prices for butter decreased, and wholesale and retail sales decreased. Almost until the beginning of March, there was quite a sluggish demand for skimmed milk powder and whole milk powder on the European market.
Dairy processing companies did not even produce new batches of skimmed milk powder but sent raw materials for cheese production, which was actively sold in supermarkets in February. Complications in shipping through the Suez Canal, due to shelling by Yemeni Houthi rebels of commercial transports, created obstacles to the delivery of European butter and cheese to external markets. By the end of February, there was a decrease in demand for skimmed milk powder and whole milk powder on external markets, as most buyers had already made their purchases. In February, European companies replenished warehouse stocks of butter and cheese and were interested in cheap raw materials.
However, a significant collapse in milk prices in Europe is unlikely in 2024. In the short term, a probable increase in raw milk prices in the EU in case of a slowdown in milk production volumes. Weather factors, a shortage of new labor in farms, the exit of certain dairy farmers from the industry due to reduced profits and production profitability may influence the reduction in milk production volumes in Europe. Market operators expect an increase in demand for raw milk from processors in preparation for Easter, which may also contribute to an increase in procurement prices in the short term.
Press service of the Milk Producers Association
23.09.2024
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