Reduced exports, weak domestic demand, declining global commodity prices, and the consequences of blackouts will contribute to lower prices for raw milk. Strengthening the fight against counterfeit goods and gray market dairy imports into Ukraine could improve the situation in the dairy industry, according to Georghii Kukhaleishvili, analyst at the Association of Milk Producers (AMP).
The average procurement price for Extra Grade milk as of November 10 was 17.05 UAH/kg excluding VAT, which is 20 kopecks less than the previous month. The price range for this grade on farms varies from 16.50 to 17.50 UAH/kg excluding VAT. The lower price range decreased by 50 kopecks, and the upper one by 70 kopecks.
Higher Grade milk costs 16.90 UAH/kg excluding VAT on average, which is 15 kopecks lower than the previous month. Prices for Higher Grade milk fluctuate from 16.50 to 17.10 UAH/kg excluding VAT. The lower price range decreased by 30 kopecks, and the upper one by 50 kopecks.
The average price for First Grade milk was 16.50 UAH/kg excluding VAT, which is 15 kopecks less than the previous month. The minimum price on farms was 16.50 UAH/kg. The maximum price was 16.70 UAH/kg. The lower price range remained unchanged, and the upper range decreased by 50 kopecks.
Accordingly, the weighted average price of the three grades was 16.95 UAH/kg excluding VAT, which is 18 kopecks less than the previous month.
Georghii Kukhaleishvili notes that procurement prices have dropped across all grades because raw milk supply in Ukraine exceeds demand, and warehouses are filled with commodity products that are difficult to sell. Despite expectations, dairy product exports to the EU under the new quotas have not resumed after October 29th, as European traders are offering Ukrainian companies lower prices for finished products than last year amid falling global commodity prices. The decline in butter prices continues in Germany, the Netherlands, and Oceania countries. The volume of butter exports to Kazakhstan, Moldova, and the South Caucasus decreased due to the increased supply of the product from competitors.
The rise in raw milk prices is holding back the weak demand for dairy products on the domestic market. Supermarkets are offering promotional discounts on dairy products, including butter, but the amount of goods in warehouses is still significant. Without emptying the warehouses, the activation of raw milk demand and price stabilization is unlikely. Some activation of domestic sales is probable ahead of the New Year holidays.
Blackouts have become a challenge for the dairy industry. Power outages complicate the storage and sale of dairy products and contribute to rising production costs due to the use of diesel generators. At the same time, the unprofitability of producing milk powder, casein, and butter is growing.
It is likely that in the second half of November, milk processing enterprises will offer another reduction in procurement prices, justifying their position by reducing export revenue to improve working capital and by the high debt of retail chains, which find it difficult to sell dairy products amid weak demand. In the worst case, milk processing enterprises may begin to refuse raw milk, which would most likely lead to a forced reduction in production volumes on MTFs in 2026. To mitigate the negative impact of factors on the dairy industry, the state should strengthen control over the circulation of counterfeit goods and close off gray imports of dairy products to clear this market niche for domestic products.
Press service of the Association of Milk Producers
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