Raw milk prices in Ukraine remain stable amidst declining demand and lower commodity prices, reports Georghii Kukhaleishvili, an analyst at the Association of Milk Producers of Ukraine.
The average purchase price for extra grade milk as of September 20 was UAH 17.45/kg (excluding VAT), which is 10 kopiykas more than a month ago. The price range for this grade on farms varies from UAH 17.00 to UAH 18.20/kg (excluding VAT). The lower end of the price range increased by 10 kopiykas, and the upper end increased by 40 kopiykas.
Higher grade costs an average of UAH 17.15/kg (excluding VAT, +10 kopiykas). Prices for higher grade milk range from UAH 16.80 to UAH 17.60/kg (excluding VAT). The lower end of the price range increased by 50 kopiykas, and the upper end increased by 20 kopiykas.
The average price for first grade milk was UAH 16.80/kg (excluding VAT), which is 40 kopiykas more than in the second half of the previous month. The minimum price on farms was UAH 16.50/kg, and the maximum price was UAH 17.20/kg. The lower end of the price range increased by 80 kopiykas, and the upper end increased by 40 kopiykas.
Accordingly, the weighted average price for the three grades was UAH 17.35/kg (excluding VAT), which is 15 kopiykas more than the results of the previous monitoring.
Georghii Kukhaleishvili notes that raw milk prices have not changed since the monitoring conducted at the beginning of September and only slightly increased compared to the second half of August. Prices remain stable because, as of late September, demand for finished products continues to fall, and demand for raw milk from processing plants is starting to decline. Processing plants are building up inventory due to the suspension of exports to the EU, reduced shipments to post-Soviet countries, decreased sales of dairy products by retail chains, and falling global commodity prices.
Prices for butter and milk powder are decreasing in Europe. American butter costs €3.5 per kg, which is almost half the price of European-made product. According to new trade agreements between the US and the EU, Europeans must annually purchase up to 20 thousand tonnes of American dairy products duty-free, including cheap butter, which presents a challenge to local producers. Ukrainian enterprises with outdated production facilities and technological bases find it difficult to compete with American producers who manage to reduce production costs. Due to the reduction in dairy product export volumes, the production of butter, milk powder, casein, and cheese product has become unprofitable in Ukraine.
The rise in raw milk production is putting pressure on both purchase prices and commodity prices. Specifically, the spot price for raw milk in Europe has equaled the spot price in Ukraine. A certain decrease in milk yields in Ukraine and an activation of demand for fresh dairy products in the domestic market are likely in winter, which may contribute to the stabilization or a slight increase in raw milk prices in Ukraine. However, given the low demand and falling commodity prices, a price increase for raw milk in the coming weeks is unlikely.
Press service of the Association of Milk Producers
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