Will prices be growing?
According to materials of the RDRC, at the beginning of August Dairy Index RDRC was 22.73 rubles (about 0.30 Euro)/kg (excluding VAT, fat and protein content - 3.6% and 3.0% respectively). This figure is 7.86% lower than during the same period in 2017. A key factor of the decrease of the index was the decline in the price of raw milk in some regions of Russia according to the application Index RDRC, as well as the strengthening of the ruble, which reduced the price of imports of dairy products, reports The DairyNews.
In general, market participants note quite stable indicators of the price of milk, but taking into account weather factors, they expect its growth by autumn. In most regions, the grazing season is coming to an end, the seasonality in production is smoothed, but the lack of forages, problems with harvesting in autumn can affect the dynamics of prices in the direction of its increase.
IN THE WORLD
According to proagro.com.ua, in July 2018, the world prices of dairy products fell by 4-10%. The only exception was whole milk powder in the US - it remained stable in price. Meanwhile, in the first half of the year, the United States are steadily increasing export supplies - in June this year, as follows from the USDEC report, the total volume of supplies of dairy products outside the country increased by 16%, while supplies of whey and cheese to China decreased. In total, American exports of the category increased by 20% for six months.
The general situation in the market is quite steady. For example, FrieslandCampina, which increased the price of milk in July, kept the indicator at the same level in August, justifying it with the expectation of stable prices at key companies in the market.
At the last 217th Global Dairy Trade auction, the most significant growth of price was shown by casein, +8%. Dehydrated milk fat rose by 1.2%, cheddar by 1.3%, whole milk powder - by 0.1%. At the same time, the price of butter decreased by 3.2%, skimmed milk powder - by 0.3%, the price of buttermilk - by 5.9%.
FAO (Food and agriculture organization of the United Nations/FAO) also notes the downward trend in the world dairy market. The average value of the price index for FAO dairy products in July was 199.1 points, which is 14.1 points (6.6 %) below the June level. At the current level, its value is 10.7 percent higher than in January 2018, but still 8 percent lower than for the corresponding period last year. The decrease affected the international prices for all types of dairy products (presented in this Index), but the prices for butter and cheese decreased most of all. Prices for whole and skimmed milk powder also fell slightly. The markets have sufficient export supply and expect a high level of production in New Zealand, stress the analysts of FAO.
IN RUSSIA
According to analysts, prices for raw milk in Russia will grow in September-October. Representatives of enterprises producing milk expect an increase of purchase prices by 0.5-1.5 rubles in autumn 2018. Earlier, the price has steadily declined and even now it is below the level of 2017.
Manufacturers note the role of the impact of imported raw materials, but it is worth remembering that Russia in the first half of 2018 actively reduced the supply of dairy products.
According to Rosstat in January-May import of condensed milk and cream into Russia decreased by 33%, including milk and cream powder by 40.3%. The supply of butter and milk fat decreased by 40.5%. About half of the volume is imported by Russia from the Republic of Belarus.
Despite the reduction in milk imports, in some regions still there are big stocks of milk powder, imported in late 2017-early 2018, note the sources of The DairyNews.
In the Republic of Bashkortostan today they encourage the development of milk processing. According to the authorities, this will allow to keep the profits within the region and will give the opportunity to dairy farmers to develop.
- On private farms and peasant farm holdings the cost price of milk is 12-14 rubles, the selling price can reach 20-22 rubles. Moreover, now we are starting to subsidize the purchase of equipment for mini-shops in the framework of the program for the implementation of income-generating projects based on the initiatives of the population. 300 million rubles were allocated for the implementation of these projects and this money is on the accounts of the Ministry of agriculture, - said the Head of the Agricultural Department of the region Ilshat Fazrakhmanov.
Oleg Dolinny, Deputy Director of Agricultural enterprise “Voschazhnikovo” agrees that during recent months there have been noticed a price reduction.
- During recent months, we, like most players on the dairy market, noticed a decrease in prices, and, it was significant. The main negative factor is a large amount of milk powder against the background of a slight increase in production and the dominance of falsification. I hope that due to the introduction of the system of EVC "Mercury" the situation on the market will change and the price will stabilize in autumn, - said Oleg Dolinny.
Stanislav Goryansky, Director of LLC “Agrofirm “Detchinskoe” stressed that the growth of prices for fuel and feed significantly affected the financial situation of farms.
- The increase in prices for diesel fuel and feed like sunflower, rapeseed meal was significant. It has significantly worsened our financial situation. And I see that colleagues have the same problems. It is likely that the trend will remain, because the cost of grain is already fixed at a high level. If the price of milk does not strengthen its position, it will hit the market hard, - said Goryansky in his comment to The DairyNews.
Currently, market participants are getting ready to the change of the price of raw milk supply. It should be reminded that according to analysts of IFCN, in the long term, the average price of raw milk in the world will be $ 41 per 100 kg of milk (fat-4.0%, protein-3.3%) or 27.4 rubles/kg at the current exchange rate of the ruble to the dollar.
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