A solid start to the year 2024
Less milk, stable markets – Andreas Gorn, Head of Insights & Dairy Markets DMK, is optimistic about the year ahead.

The milk market is much calmer now after being high volatile for some time. Supply and demand are returning to normal thanks to the lessening impact of the war in Ukraine and inflation. As we start the year, the market is looking more balanced than it has in recent years. Prices on the commodity and product markets are also stable, particularly as the supply of finished goods is lower, preventing prices from falling as they did in previous years. All that means we are getting off to a good start for 2024. But what’s next?

Robust market

Higher costs and more regulation are still reducing the production of milk, alongside the further decline in dairy cow numbers. We are also likely to see a fall in feed quantities and quality after a lot of land in Germany was flooded during the winter, particularly in the north. On the global market, major exporters of raw materials are also supplying less than last year. These trends seem set to continue or increase slightly in 2024. With demand expected to be robust, much of our raw materials will keep flowing into making cheese this year. As milk volumes are falling, this is likely to lead to lower production of butter and powder products, meaning less of these will be available, including abroad. We are already seeing the effects of the increased allocation of milk to cheese production, which is leading to shortages of other products. That suggests a robust market in 2024. However, demand has not yet recovered fully, with lower demand for milk and dairy products in China, the world’s largest importer.

“The markets are more balanced again.”

– Andreas Gorn, Head of Insights & Dairy Markets DMK.

Uncertainties remain

All in all, prices in 2024 are likely to be more stable compared to past years, also thanks to the very stable outlook for oil prices, which impact agricultural commodities like skimmed milk powder. Products for the retail trade should con-tinue to perform better than standard goods. But some uncertainties remain, such as economic and political instability or adverse weather patterns so we cannot rule out stronger price fluctuations. Stronger demand and reduced supply may also have an impact.