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Market Monitoring Dairy Industry: Insights July 2022
Mathieu Geuskens published on October 28, 2022
In this monthly dairy industry update, our analysts will share valuable insights about the dairy industry. This month: the trade volume of Dutch cheeses (Gouda, Maasdam, Edam) was down 29.0% in July 2022 compared to July 2021, and prices are up 46.9%.
Market Monitoring of the dairy industry
Market monitoring helps agri-food companies objectively evaluate their current position within the market and the development of that position. Furthermore, it helps to spot new growth opportunities and whether the market is saturated.
For the A-INSIGHTS Market Monitor, we analyze the global trade in dairy products on a monthly basis. Derived from local customs agencies and statistics offices, the data gives us insight into monthly trade volumes and prices for all major importers and exporters. Combined with our sector expertise, we can provide you with an up-to-date view of the developments in the global dairy market.
Prices continue to break records as volumes are at historic low
In July 2022, international trade in Dutch cheeses (Gouda, Maasdam, Edam) reached the lowest level recorded since 2015. The monthly trading volume was down 25.8 thousand tonnes (-29%) year-over-year. Year-to-date, the volume decline is less pronounced, but still significant at 9.4%. With milk supply recovering in key production countries the Netherlands and Germany volume recovery was to be expected, but it appears that especially the Netherlands has shifted to other products (see next paragraph).
Price levels continue to break historic records: the average trading price for Dutch cheeses reached €5.42/kg, up €1.73 compared to July 2021 (+46.9%). The price increase is in line with raw milk price developments in Western Europe, where cost inflations incurred by dairy farmers drive milk cooperatives to raise prices paid to their members. The price increase in enhanced by a higher share of the more expensive Maasdam in the product mix, as the lions share of volume decline is found in Gouda trade.
Figure 1. Total export Dutch cheeses (Gouda, Edam, Maasdam) year-to-date until July, tonnes and €/kg
Netherlands volume decline is driven by a shift in product mix
Despite the recovered raw milk supply, the export of Dutch cheeses by both the Netherlands and Germany continue to decline. Interestingly, for the Netherlands, the continued volume decline is fully driven by a shift in the product mix of its cheese exports: the export volume of grated cheese is up 53% year-to-date, with most additional volume destined for Germany. This implies that in times of rising prices, demand in Germany has shifted from higher-quality and higher-priced Dutch cheeses to cheaper grated and powdered cheese.
However, Germany's cheese export is down across the board, implying that Germany dairy processors have switched to other dairy products or continue to experience the negative effects of the lower milk supply.
Figure 2. Top 5 exporters Dutch cheeses (Gouda, Edam, Maasdam) July, tonnes and €/kg
Volume decline for all major exporters, price levels key driver
In July, the import volume of all major importers declined compared to 2021. Inter-country trade between the Netherlands and Germany is a key driver, responsible for 16% of the total volume decline. Other notable contributors to the overall volume decline are Japan (-1,901 tonnes; 7% of total volume decline) and the Czech Republic (-1,560 tonnes; 6% of total volume decline).
The rising price levels are a key driver for volume decline: prices in countries with a substantial decline of import volume are up between 38% (Germany) and 60% (Czech Republic). In the case of Germany, it is clear that consumers have chosen lower-priced substitute products, but for countries like Japan, and the Czech Republic, overall cheese imports are down significantly. With the continued increase of raw milk prices, it is unlikely that trading prices can or will go down in the next months, implying further volume decline towards the end of the year.
Figure 3. Top 10 importers Dutch cheeses (Gouda, Edam, Maasdam) May, tonnes and €/kg
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