The term "spot milk" is increasingly used in the dairy business, and it is key to understanding price dynamics. Unlike raw material supplied under long-term contracts, "spot" is milk sold for a short term. Although the share of such milk in Ukraine is small, these batches are a sensitive indicator that sets the overall trend and, therefore, has a noticeable impact on contract negotiations.
What is the Spot Milk Market?
"Spot" milk is milk that is sold without a long-term contract, for a short term (e.g., supply "today or tomorrow"), and at a price formed by the current market.
How It Works
- Spot batches of raw milk are primarily formed at processing enterprises, which can then conclude a spot agreement between themselves.
- Price here and now — reflects the real balance of supply and demand.
- The spot market is very sensitive to seasonality, changes in production, logistics, and technological factors.
In countries with a developed dairy industry (Poland, Germany, Netherlands):
- Spot accounts for 5–15% of raw milk turnover.
- However, these 5–15% create the market signal for the entire system.
In Ukraine:
- The share of spot milk is significantly smaller—estimated at up to 5% (depending on the season).
- However, its influence on contract negotiations is palpable.
It is important to emphasize that when comparing raw milk prices in Ukraine with other countries, particularly the leaders in dairy product exports to Ukraine (such as Poland, the Netherlands, Germany), it is absolutely incorrect to compare the contract price for a farm with spot prices. This is because the share of spot milk is insignificant, highly volatile, and indicates only trends in the ratio of supply and demand. So, for example, the statement that in order to maintain the competitiveness of Ukrainian dairy exports, the price for Ukrainian farms should be 20 or 30% lower than the spot prices of, say, Poland is incorrect.
How the Spot Market Affects Raw Milk Prices
- Market Indicator — Spot prices quickly react to changes: if milk supply increases (e.g., the seasonal spring increase), the spot price drops → farms are under greater pressure to reduce the price of milk from the farm.
- Processors reference the spot price — when the spot price rises, it signals to processors that raw material is becoming scarce, and they may change contract terms (e.g., raise the procurement price).
- Contracts "catch up" with the spot price — although contracts are concluded for longer periods, their terms are often adjusted based on the trends set by the spot market.
- Risks for the producer — when the spot price has fallen or stabilized at a low level due to weak demand on the domestic or export markets, farms are forced to sell raw material cheaper, as it is impossible to accumulate surpluses. This exact situation is being observed in Ukraine in the autumn of 2025—the reduction in external demand negatively affects the price of raw material.
- The influence of the spot milk market in exporter countries is also felt in Ukraine. The rise or fall of spot prices in Poland, Germany, Italy, and other major exporters indirectly shapes the dynamics of the domestic raw milk market. For instance, a drop in spot prices in these countries signals that a decrease in the cost of their finished dairy products is expected in 2–3 months. It is with these products that Ukrainian milk processing enterprises and raw milk producers compete, both on the domestic and export markets.
That is why it is important for dairy farms to closely monitor spot market trends and react promptly to changes. The Association of Milk Producers (AMP), whose Analytical Department systematically monitors the situation in the domestic and foreign markets, can assist with this. Twice a month, AMP holds exclusive analytical online briefings for its participants, where it not only analyzes the results of the previous period but also outlines the key factors that will determine the development of Ukraine's raw milk market in the coming months, helping farms to adjust their production and financial plans in advance.
We invite Ukrainian dairy farms to join the Association of Milk Producers. Membership in AMP allows you to stay informed about current trends in the Ukrainian and global dairy markets, receive analytics, consultations, expert support, and timely recommendations for making effective management decisions.
To learn about the conditions for joining AMP and details about services and support for member farms, please call:
+38-067-2327853
Press service of the Association of Milk Producers
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