Late-June Heatwave Cuts EU Milk Deliveries, Pushing Up Cream and Concentrate Prices
After months of milk deliveries running well above prior-year levels, late-June heat cut German output 3.7% in calendar week 26, according to ZMB. France fell harder, down 10.9% week-on-week. Skimmed milk concentrate, industrial cream and skimmed milk powder are all commanding higher prices.
Heat interrupts a long run of high milk supply
Milk deliveries in Germany and the wider European Union have run well above prior-year levels for months, with no reversal in sight. Late-June heat has now delivered at least a short-term shock, according to lomazoma.com, and it could carry consequences for the dairy market.
Citing ZMB, the report states that milk production in calendar week 26 fell 3.7%. The year-on-year gain, which had been the defining feature of the season, narrowed to 3.6%. Deliveries had already slipped 1% in mid-June, during calendar week 25, marking the first cracks in an otherwise strong supply trend.
France falls harder than Germany
France, where the heatwave arrived earlier and proved more extreme, saw a sharper decline. Milk volumes in week 26 dropped 10.9% against the previous week and stood 7.0% below the prior-year level. Production reportedly declined in other countries as well. At the same time, milk contents fell, reducing the value of each litre delivered to processors.
What it means for buyers
- Germany: milk production down 3.7% in week 26; year-on-year gain trimmed to 3.6%.
- France: volumes down 10.9% week-on-week and 7.0% below the prior year.
- Falling milk contents compound the drop in usable raw material.
Liquid raw materials and powder markets react
The sudden pullback in milk supply has reshaped the market for liquid raw materials. Skimmed milk concentrate is drawing strong demand and has risen unexpectedly sharply in price, according to the report. Industrial cream is also fetching higher prices as processors compete for tighter volumes.
The heatwave is feeding through to skimmed milk powder as well. With less raw material available, dairies dried less skimmed milk. A large share of current output is already committed under contract, leaving fewer free quantities on the spot market. Demand has not yet been materially affected, but buying interest for longer-dated deliveries is rising, and producers are asking for higher prices.
Outlook
How milk deliveries develop from here, and how the market responds, remains to be seen. The central question for traders is whether the June heat marks a genuine turn in the EU supply trend or only a brief interruption before deliveries recover.
