The increase in raw milk prices in the second half of November was due to the growing interest of European traders in domestically produced butter, but the decline in demand for dairy products in the domestic market may stabilize prices in the second half of December, according to the Association of Milk Producers (AMP).
According to analysts, as of November 20, the average purchase price of extra milk increased by 1 UAH/kg to 19.40 UAH/kg excluding VAT, the price of premium milk increased by 1.20 UAH/kg to 18.65 UAH/kg excluding VAT, and the price of first-class milk increased by 1 UAH/kg to 17.7 UAH/kg.
Accordingly, the weighted average price of the three varieties amounted to 18.58 UAH/kg excluding VAT, which is 1.07 UAH more than a month earlier.
AVM analyst Giorgi Kukhaleishvili noted that another increase in raw milk prices in Ukraine was caused by the increased demand for butter in foreign markets in November.
“As the price of New Zealand butter rose to $7 thousand/ton, European traders started to turn to Ukrainian producers with a desire to buy butter at more attractive prices. After a slight decline in demand for exchange-traded products at the beginning of the month, there is now an increase in interest in butter and cheese on foreign markets,” the expert explained.
At the same time, the AMP points to a decrease in demand for raw milk from Ukrainian dairy processing enterprises in November compared to September-October. At the same time, the growth rate of purchase prices is gradually slowing down due to a decrease in consumer demand for dairy products in the domestic market.
“Ukrainian consumers with below-average incomes have started to deny themselves dairy products due to rising prices not only for dairy products but also for other food products. Consumption of spreads is growing in the country as a cheaper alternative to butter,” the industry association stated.
The growth of raw milk prices is constrained by high prices for finished products and the difficulty of selling them to consumers in the domestic market. Under such conditions, a slight increase in purchase prices is possible in early December with the prospect of further stabilization in the second half of the month, the AMP predicts.
