The great trends at the end of October 2021:
Milk collection and production:
Over the first 7 months of the year, all the large dairy regions, with the exception of Ukraine, have increased production.
The highest increase in collection has been in Argentina and New Zealand.
During the month of August, the growth in production has been contracting as New Zealand, Australia and the United Kingdom have all three shown decreases in volume.
European milk production has been impacted by the increased cost of inputs and extreme weather conditions (droughts and floods). The three main milk producing countries in Europe (Germany, France and the Netherlands) show a downfall in their milk production.
Since Week 40, French collection has been down compared with 2020. The high prices of feed has stopped producers boosting their production via supplementary feeding.
The price of milk stabilised in Europe in September. Ireland, France, Belgium and the Netherlands pay the highest milk prices. Denmark and Germany pay the same price as the European average. Poland continues to pay very low prices disconnected from the other milk prices in Europe.
The average price of traditional 38-32 milk in France was around 356€ for 1,000 litres in August 2021.
The milk price is led by the increase in the quotation of industrial products since the beginning of the year.
World commodities prices:
- Butter: continued to progress again in October and reached 4,320€/ton. Demand worldwide is good. The offer has contracted from the world’s premier exporter: New Zealand.
The market is therefore firm as it is supported by the reduction in the butter offer.
- Powdered whole milk: continued to progress again in October and reached 2,890€/ton. The price increased by 190€/ton in one month.
Powder stocks have been emptied in Europe and the production of fresh powder is low. The United States has encountered logistical problems which are bottlenecking exports. The worldwide offer is therefore limited even though there is demand.
The market is firming up.
- Powdered whole milk: continued to progress again in October and reached 3,270€/ton. New Zealand, the premier supplier in the world market, suffered bad climate conditions during the months of August and September. Two countries, Uruguay and Argentina, increased their production and were therefore more present in the market.
Demand was upheld by China.
China, which had reduced its total share of purchases, and the countries of south east Asia which took a back seat owing to economic difficulties have started purchasing again.
The fats market:
The fats market has been impacted by the strong tension of the European offer related to the decrease in collection and also by a sustained demand consequent to the good recovery of business post-Covid (the hotel industry, particularly with unexpected patronage and needs still be to be covered). The bulk products market has therefore run riot. The price of cream, which has been constantly increasing since the end of August, led to the price of butter passing 7,000€/ton in cubed butter equivalent. Until then, the market had been more or less protected by the stocks of frozen butter. Today, the price of butter is showing a strong increase, proof that the availability of frozen butter is becoming rare too.
The protein market:
The protein market has been impacted by the contraction of the offer worldwide. Stocks are limited. The low availability of materials is stretching the market. While demand remains sustained. China was the main consumer of powdered whole milk. The countries of south east Asia have been beginning to purchase again since September. They had fallen well short in the first half of the year. The price of proteins has been increasing for two months and is approaching 3,000€/ton. A level which had not been reached since 2013.