The spring surplus of milk makes Ukrainian dairy processors, albeit reluctantly, but increase drying of milk. The reason for the lack of enthusiasm is evident: firstly, the price for this product is too low, and secondly – raw milk is still not so cheap to profitably manufacture powdered milk. – INFAGRO

Many of dairy processors say that their production cost of SMP is 65-70 thousand UAH/t, and the prices have dropped to the level of 50-57 thousand UAH/t. Western traders are now buying Ukrainian SMP for usually not more than 1600 USD/t. It is possible to sell SMP to CIS countries for 2000 USD p/t, but even on this market the prices have been lowering due to those operators who do not want to sell the product to European traders for cheap.

As for the WMP, the prices have been decreased less significantly. On the world markets this product is also not that cheap. Ukrainian WMP is contraced at around 2500-2700 USD/t. Accordingly, on the domestic market it is not easy to buy the product cheaper than for 70000 UAH/t. The whole milk powder is not much cheaper than butter, and this contributes to the increase of its production.

Falling demand prices constrain the massive increase in output of milk powder, which in turn leads to decrease in exports. Compared to February, in March the volume of SMP exports decreased by a quarter, to 1.6 thousand tonnes.

But export sales of SMP are gradually increasing. Last month the manufacturers sold 350 tons of goods.

INFAGRO analysts believe that regardless of the price trends, Ukrainian exports of milk powder will increase in the near future.

INFAGRO