Ukraine: Milk Increases, Prices Look Downward
Source: The DairyNews
Raw milk is becoming cheaper in Ukraine due to increased production volumes in spring and the emergence of surpluses in the market. Dairy processing enterprises require less raw materials amidst slowing exports and reduced consumption of dairy products in the domestic market. Further devaluation of the hryvnia and increased supplies of dairy products to Europe could contribute to stabilization of purchase prices, according to Georgiy Kukhaleishvili, an analyst at the Milk Producers Association.
The average purchase price of extra-grade milk as of April 5 was 14.38 UAH/kg excluding VAT, which is 12 kopecks lower than a month ago. The price range for this grade varies fr om 13.50 to 15.00 UAH/kg excluding VAT on farms. The upper limit of the price range remained unchanged, while the lower limit decreased by 50 kopecks over the past month.
Higher-grade milk costs an average of 14.38 UAH/kg excluding VAT (down by 12 kopecks). Prices for higher-grade milk fluctuate between 13.50 and 15.00 UAH/kg excluding VAT. Compared to the first half of March, the lower limit of the price range decreased by 50 kopecks, while the upper limit remained unchanged.
The average price for first-grade milk was 13.52 UAH/kg excluding VAT, which is 5 kopecks lower compared to the price in the first half of March. The minimum price on farms was 12.75 UAH/kg, and the maximum price was 14.10 UAH/kg. Over the past month, the lower limit of the price range decreased by 25 kopecks, and the upper limit dropped by 18 kopecks.
Accordingly, the weighted average price of three grades amounted to 14.09 UAH/kg excluding VAT, which is 2 kopecks lower than a month ago.
Georgiy Kukhaleishvili notes that raw milk is becoming cheaper in Ukraine due to increased supply in the domestic market. The relatively warm spring this year contributed to increased milk yields. Compared to March 5, the price of extra and higher-grade milk decreased by 0.8%. The price decrease was most significant in household farms, wh ere both production volumes and the quality of raw milk deteriorated. Since February, milk has continued to decrease in price on the spot market. As of early April, there are surpluses of raw milk in Ukraine, which also contributes to price reduction.
Dairy processing enterprises require less raw materials due to the slowdown in dairy product exports and reduced consumption by the Ukrainian population during Lent. At the same time, a challenge for Ukrainian processors and farmers is the large supply of imported cheeses in the domestic market, which compete with domestic producers' products. Unlike most European countries, neighboring Poland is increasing its production and processing of raw milk. Ukraine is among the top three markets for Polish dairy product manufacturers. As long as imports of dairy products into Ukraine exceed exports, it will restrain demand for raw materials from domestic processors and restrain growth in purchase prices.
It is likely that purchase prices may stabilize in early May amid increased consumption of dairy products during Orthodox Easter. Most likely, dairy processing enterprises will refrain from reducing milk purchase prices further, provided there is continued devaluation of the hryvnia and a widening gap in raw material prices between Ukraine and the EU. If milk in Ukraine becomes significantly cheaper than in Europe, favorable conditions may arise for increasing exports of exchange-traded goods, and Ukrainian processors will need more raw materials to fulfill orders from foreign clients. Currently, Ukraine has limited access to alternative markets for dairy products in Europe and the post-Soviet countries, making the production of exchange-traded goods unprofitable for now.
Press Service of the Ukrainian Milk Producers Association
Higher-grade milk costs an average of 14.38 UAH/kg excluding VAT (down by 12 kopecks). Prices for higher-grade milk fluctuate between 13.50 and 15.00 UAH/kg excluding VAT. Compared to the first half of March, the lower limit of the price range decreased by 50 kopecks, while the upper limit remained unchanged.
The average price for first-grade milk was 13.52 UAH/kg excluding VAT, which is 5 kopecks lower compared to the price in the first half of March. The minimum price on farms was 12.75 UAH/kg, and the maximum price was 14.10 UAH/kg. Over the past month, the lower limit of the price range decreased by 25 kopecks, and the upper limit dropped by 18 kopecks.
Accordingly, the weighted average price of three grades amounted to 14.09 UAH/kg excluding VAT, which is 2 kopecks lower than a month ago.
Georgiy Kukhaleishvili notes that raw milk is becoming cheaper in Ukraine due to increased supply in the domestic market. The relatively warm spring this year contributed to increased milk yields. Compared to March 5, the price of extra and higher-grade milk decreased by 0.8%. The price decrease was most significant in household farms, wh ere both production volumes and the quality of raw milk deteriorated. Since February, milk has continued to decrease in price on the spot market. As of early April, there are surpluses of raw milk in Ukraine, which also contributes to price reduction.
Dairy processing enterprises require less raw materials due to the slowdown in dairy product exports and reduced consumption by the Ukrainian population during Lent. At the same time, a challenge for Ukrainian processors and farmers is the large supply of imported cheeses in the domestic market, which compete with domestic producers' products. Unlike most European countries, neighboring Poland is increasing its production and processing of raw milk. Ukraine is among the top three markets for Polish dairy product manufacturers. As long as imports of dairy products into Ukraine exceed exports, it will restrain demand for raw materials from domestic processors and restrain growth in purchase prices.
It is likely that purchase prices may stabilize in early May amid increased consumption of dairy products during Orthodox Easter. Most likely, dairy processing enterprises will refrain from reducing milk purchase prices further, provided there is continued devaluation of the hryvnia and a widening gap in raw material prices between Ukraine and the EU. If milk in Ukraine becomes significantly cheaper than in Europe, favorable conditions may arise for increasing exports of exchange-traded goods, and Ukrainian processors will need more raw materials to fulfill orders from foreign clients. Currently, Ukraine has limited access to alternative markets for dairy products in Europe and the post-Soviet countries, making the production of exchange-traded goods unprofitable for now.
Press Service of the Ukrainian Milk Producers Association
23.09.2024
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