The rise in raw milk prices in the second half of November occurred against the backdrop of increased interest from European traders in domestically produced butter. Meanwhile, a decrease in demand for dairy products in the domestic market may contribute to price stabilization in the second half of December, reports Georgiy Kukhaleyshvili, an analyst at the Association of Milk Producers of Ukraine.
As of November 20, the average purchase price of extra grade milk was 19.40 UAH/kg excluding VAT, which is 1.00 UAH more than a month ago. The price range for this grade in farms varies from 18.30 to 20.50 UAH/kg excluding VAT. The lower end of the price range increased by 80 kopiikas, and the upper end increased by 1.00 UAH over the past month.
Higher grade milk averages 18.65 UAH/kg excluding VAT (+1.20 UAH). Prices for higher grade milk range from 17.40 to 20.50 UAH/kg excluding VAT. Compared to the results of the monitoring in the second half of October, the lower end of the price range increased by 90 kopiikas, and the upper end increased by 2.50 UAH.
The average price of first grade milk was 17.70 UAH/kg excluding VAT, which is 1.00 UAH more compared to the price in the second half of October. The minimum price in farms was 16.00 UAH/kg and has not changed over the past month. The maximum price was 19.00 UAH/kg and increased by 2.00 UAH.
Accordingly, the weighted average price of the three grades was 18.58 UAH/kg excluding VAT, which is 1.07 UAH more than a month ago.
Georgiy Kukhaleyshvili notes that the latest increase in raw milk prices in Ukraine was influenced by the activation of demand for butter in foreign markets in November. As New Zealand butter rose to $7,000 per ton, European traders began to turn to Ukrainian producers with the desire to buy butter at more attractive prices. After a slight decrease in demand for exchange-traded goods at the beginning of the month, there is now an increase in interest in butter and cheese in foreign markets.
However, the demand for raw milk from dairy processing enterprises in Ukraine is no longer as active as in September or October, and the growth rate of purchase prices is gradually slowing down, which is associated with a decrease in consumer demand for dairy products in the domestic market. Ukrainian consumers with below-average incomes have begun to forgo dairy products due to rising prices not only for dairy products but also for other food products. The consumption of spreads, as a cheaper alternative to butter, is growing in the country.
The rise in the price of raw milk is restrained 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 likely at the beginning of December with the prospect of further stabilization in the second half of the month.
Press service of the Association of Milk Producers
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