A persistent imbalance between supply and demand continues to put pressure on milk payouts at the Dutch dairy cooperative FrieslandCampina. Organic milk is also affected, even as global dairy prices show tentative signs of recovery.

In February, FrieslandCampina will lower its guaranteed price for conventional milk by EUR 0.50 to EUR 39 per 100 kilograms of milk. This marks the seventh consecutive monthly decline, following a sharp price cut in January.

According to the cooperative, the reduction is driven by an ongoing imbalance between high milk supply and subdued market demand. The situation is also expected to affect other European reference companies.

Organic milk is hit even harder. Here, FrieslandCampina is reducing the guaranteed price by EUR 3 to EUR 65 per 100 kilograms. Once again, the cooperative points to weak demand relative to supply as the main explanation.

The development is being closely watched in Denmark, where Arla is set to announce its milk price for February later this week. In January, Arla reduced both its conventional and organic milk prices by around DKK 0.30 per kilogram.

Global prices show modest gains
At the same time, international dairy markets are showing tentative signs of improvement. At the latest Global Dairy Trade auction, overall prices rose for the second consecutive time, driven by higher prices for products such as butter and milk powder, while cheese prices remained more subdued.

Overall, the situation points to a market in which European milk payouts remain under pressure, while global price signals are beginning to move in a more positive direction.

By Maja Løvstrup
Source: LandbrugsAvisen / FrieslandCampina
Photo: FrieslandCampina