Domestic dairy prices over the reporting period have demonstrated mixed trend. High activity of domestic buyers supports price growth for some positions, but the negative global sentiments and the low activity of foreign buyers continue to exert pressure on the dairy market. In the next few weeks, due to the New Year holiday season and numerous holidays, no significant changes are expected in the dairy sector - January is considered the month of the «holiday calm», during which the producers of dairy products expect a gradual accumulation of goods in warehouses.
Milk powder (SMP/WMP)
SMP/WMP prices in the domestic and export markets have slightly strengthened over the past week. Growth for these positions is facilitated by an increase in buyers’ activity, a seasonal rise in the price of raw materials and a reduction in production. Thus, in November, Ukrainian enterprises produced 1,762 tons of SMP compared to 2,541 tons produced in October. Production of WMP also decreased - to 1,115 tons compared to 1,275 tons a month earlier. At the same time, the weak prices for these products in the global market and the decline of the index of both products in the latest GDT auction are restraining growth.
Prices for butter for the reporting period have decreased. The main reason for the decline has been the weakening of buyers’ activity after a short increase in interest in the goods last week. Also pressure on the market continues to be exerted by the growth of supply from Oceania and the expectation of accumulation of goods in warehouses of producers during the holidays.
Prices for spreads on the domestic market decreased under the influence of a downward trend for butter. At the same time, slowdown in demand in the export and domestic markets is an additional factor of decline.
Prices for casein in the domestic and export markets sank once again. The index of casein has decreased at the last GDT auction, so the interest of foreign buyers towards Ukrainian casein remains relatively low. At the same time, the seasonal factor and the reduction in the production of this product restrain the decline in prices. Thus, in November, Ukrainian enterprises produced 228 tons of casein and caseinates compared to 438 tons in October.
The market of cheeses this week has shown the further strengthening amid the growth of activity of buyers on the threshold of New Year’s holidays. Seasonal increase in the cost of raw milk supports the strengthening of prices for this position. The interest of foreign buyers to this position this week also slightly increased, which producers associate with the subsequent slack in the export market in January.
Prices for whey in Ukraine have not changed over the reporting period, while in the export market they demonstrated decline again. Market participants note that there are almost no contracts for the delivery of this position with foreign buyers, what causes growing concern, since high stocks of this product can make a significant negative impact on the market in the period after the holidays.