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Commodities Bulletin Dairy Milk & Eggs Focus on Milk

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In the dairy, milk and eggs market, demand contraction drives the market.

 

Milk production is also expected to decrease in 2023.

After the price drops recorded by processed products, spot milk quotes, which had reached all-time highs, also recorded slight percentage declines.

The price weakness is mainly attributable to the following factors:

  • Contraction of foreign demand (especially from China, due to pandemic containment policies) and domestic demand due to high inflation levels, economic slowdown and the resulting restrictive monetary policies of central banks in the major advanced economies.

  • Improved milk deliveries in the main EU production areas due to favourable weather. The increase in deliveries gave processing some respite.

  • The low competitiveness of EU products compared to other international origins.

  • The drop in the cost of production inputs. By way of example, the price of maize on the EU market has fallen by about 15% since October; natural gas prices (NGT) have fallen by 50%.

  • Further price declines are expected, especially in view of the new spring production peak. Bullish risk factors, especially for the powder market, include the possible restart of demand from China (with the easing of restrictive measures and post-New Year) and Algeria.

To read the full February 2023 Commodities Bulletin register here:

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