Ukrainian Milk Market Faces Price Decline Due to Surpluses and Low Domestic Demand
Source: The DairyNews
Georgy Kukhaleishvili, an analyst at the Association of Milk Producers, reports that an oversupply of raw milk in Ukraine coupled with weak domestic demand has led to a noticeable drop in purchase prices. As of May 5, the average purchase price for extra grade milk was UAH 13.99 per kilogram without VAT, a decrease of 39 kopecks from the previous month. The price range for this milk grade varies between UAH 13.40 to UAH 14.60 per kilogram without VAT.
The price for the highest grade of milk also averages at UAH 13.99 per kilogram without VAT, reflecting a similar decline. Premium milk prices range from UAH 13.40 to UAH 13.90 per kilogram, showing reductions at both ends of the spectrum since mid-April.
First-class milk is currently priced at an average of UAH 13.29 per kilogram without VAT, down 23 kopecks since early April. The lowest price observed in farms was UAH 12.65, while the highest remained steady at UAH 14.10 per kilogram.
Overall, the weighted average price for the three milk grades has fallen to UAH 13.76 per kilogram without VAT, down by 34 kopecks over the past month.
According to Kukhaleishvili, May's price reductions are a result of an abundant supply of milk on the market, which is not matched by demand from processing enterprises. Despite a previous shortage, raw milk prices are declining due to reduced consumption of dairy products in Ukraine and falling prices for exchange-traded goods. Notably, the price of cheese products, primarily exported to Kazakhstan, has seen significant drops due to competitive pricing from Russia and Belarus in that market.
Unlike their European counterparts, Ukrainian milk processors often lack long-term contracts, making it difficult to stabilize purchase prices. In contrast, EU countries are hesitant to reduce prices significantly, aiming to cushion the impact of potential cost increases during summer low yield periods.
Looking ahead, there are opportunities to enhance Ukraine’s dairy product exports, which could bolster raw milk prices. The latest session of the Global Dairy Trade (GDT) on May 7 indicated a slight uptick in prices for most commodities, driven by the end of Ramadan in the Middle East and North Africa and early signs of economic recovery in China. Currently, the price of raw milk in Ukraine is 21% lower than the European average and 25% below that in Poland, potentially attracting more interest from European buyers, according to the Association's press service.
First-class milk is currently priced at an average of UAH 13.29 per kilogram without VAT, down 23 kopecks since early April. The lowest price observed in farms was UAH 12.65, while the highest remained steady at UAH 14.10 per kilogram.
Overall, the weighted average price for the three milk grades has fallen to UAH 13.76 per kilogram without VAT, down by 34 kopecks over the past month.
According to Kukhaleishvili, May's price reductions are a result of an abundant supply of milk on the market, which is not matched by demand from processing enterprises. Despite a previous shortage, raw milk prices are declining due to reduced consumption of dairy products in Ukraine and falling prices for exchange-traded goods. Notably, the price of cheese products, primarily exported to Kazakhstan, has seen significant drops due to competitive pricing from Russia and Belarus in that market.
Unlike their European counterparts, Ukrainian milk processors often lack long-term contracts, making it difficult to stabilize purchase prices. In contrast, EU countries are hesitant to reduce prices significantly, aiming to cushion the impact of potential cost increases during summer low yield periods.
Looking ahead, there are opportunities to enhance Ukraine’s dairy product exports, which could bolster raw milk prices. The latest session of the Global Dairy Trade (GDT) on May 7 indicated a slight uptick in prices for most commodities, driven by the end of Ramadan in the Middle East and North Africa and early signs of economic recovery in China. Currently, the price of raw milk in Ukraine is 21% lower than the European average and 25% below that in Poland, potentially attracting more interest from European buyers, according to the Association's press service.
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