Drought in Russia: Grain region particularly affected
In Russia, the main region for grain cultivation has been experiencing dry conditions for weeks. This is likely to result in lower yields and poorer quality than previously expected.
The stock prices for butter and milk powder for the next twelve months have fallen, leading to a decrease in the milk price forecast.
At the end of April, the IG Milk Barometer calculated from the stock prices of the future twelve months decreased by 1.6 cents compared to the previous month to 48.9 cents/kg of milk. Both skim milk powder (-2.5%) and butter (-2.0%) have decreased in price at the EEX exchange, as reported by the German Raiffeisenverband (DRV). The values are defined for raw milk ex-farm (4.0% fat, 3.4% protein, excluding VAT).
The IG Milk Barometer does not reflect a milk price but is considered an early indicator of the possible future development of the milk market. Information on the current milk payout prices of dairies can be found in the Milk Price Barometer.
Uncertainties and the US supply lower price forecasts.
At the end of April, the IG Milk Barometer curve for the next 12 months compared to the previous month of March shows a weaker trend towards the end of the year. This reflects the uncertainties and associated higher costs in the global trade and financial markets.
In addition, a higher export supply on the international milk markets can be expected from the US, as the weak US dollar makes the already somewhat higher milk production quantities cost-effective for the world market.
Nevertheless, there is still an assessment of a slightly weaker raw material supply in Europe with possible risk factors in the coming weeks: Bluetongue disease and FMD in Southeastern Europe. Local prices can therefore both rise and fall.
Background IG Milk Barometer
The barometer is intended to assist milk producers in assessing the market situation and planning milk quantities. The ife Institute in Kiel calculates the values on behalf of the German Raiffeisenverband (DRV) and the Interessengemeinschaft Genossenschaftliche Milchwirtschaft (IG Milk). The values of the barometer do not reflect the future development of the milk payout price of a specific dairy but represent the external assessments of market participants on the commodity futures exchange in trading with butter and skim milk powder.