Ukraine: raw milk prices are growing

Milk market of Ukraine is increased in November: many processors do not have enough milk to satisfy the needs, therefore prices quickly grow.  

State Statistics Service published data on milk production in Ukraine.

In October it decreased to 883400 t, which was  by 11.9% lower in comparison with September and down 4.7% from October 2014. YTD October the production was reduced by 4.4% or by 426800 t to 9 288 200 t (production in farms was increased 0.4%, in households – decreased by 5.9%).

Number of cows was reduced, but not so considerably, as in summer. As of November 1 there were 2 238 000 cows in the country, which was by 5.2% less, than a year ago. Unlike production, decrease in cows’ number differs not essentially in farms categories (farms showed decrease by 4.2%, households – by 5.5%). It indicates a growth in milk production per cow in agricultural enterprises.

Milk prices have promptly grown in Ukraine from the beginning of November. Actually both producers, and processors were ready to their increase by UAH 0.20-0.30/kg. But prices for milk from farms are continue growing in the middle of month. The reason is the activity of several processors which lifted the top level of prices for big agricultural producers to UAH 6.00-6.50/kgin chase of volumes.

In the first half of November the average prices for milk from farms was at UAH 5.40-6.00/kg in Ukraine. Processors should offer above UAH 6.00/kg for additional volumes, and for today such price is very heavy for many dairy companies.

Average price for milk from households makes UAH 3.10-3.50/kg in the middle of November.

Prices for spot raw materials also grow.

Taking into account the current prices it becomes unprofitable to produce some kinds of products, therefore local plants will start to resale milk. It practically will not influence the milk price, but number of spot offers should increase, thereby removing stress from primary market.

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