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Butter puts pressure on raw milk prices
Purchase prices continued to move downward in the second half of January under the influence of the emergence of surpluses of raw milk on the domestic market and a decrease in demand from dairy processing enterprises. The decrease in butter prices on foreign markets led to a decrease in dairy product exports from Ukraine in December 2024. Raw milk is becoming cheaper under the influence of a decrease in demand for fermented milk products from the population, — reports Georgy Kukhaleyshvili, an analyst of the Association of Milk Producers.
The average purchase price of Extra Grade milk as of January 20 was 18.40 UAH/kg excluding VAT, which is 1.20 UAH less than a month ago. The price range for this grade in farms varies from 17.50 to 18.70 UAH/kg excluding VAT. The lower limit of the price range decreased by 1.00 UAH, and the upper limit decreased by 1.80 UAH over the last month.
Higher Grade costs an average of 18.05 UAH/kg excluding VAT, which is 0.60 UAH less compared to December 20. Prices for Higher Grade milk range from 17.20 to 18.20 UAH/kg excluding VAT. Based on the monitoring results of the second half of December, the lower limit of the price range decreased by 0.60 UAH, and the upper limit decreased by 1.30 UAH.
The average price for Grade I milk was 16.95 UAH/kg excluding VAT and decreased by 0.65 UAH compared to the second half of December. The minimum price in farms was 16.50 UAH/kg and did not change over the past month. The maximum price was 17.10 UAH/kg and decreased by 1.40 UAH.
Accordingly, the weighted average price of the three grades was 17.80 UAH/kg excluding VAT, which is 0.82 UAH less than a month ago.
Georgy Kukhaleyshvili notes that purchase prices in Ukraine continued to move downward in the second half of January, given the decline in world butter prices. This was probably the key reason for the reduction in the volume of butter exports, as well as cheeses and condensed milk by Ukrainian companies in December 2024 and affected the reduction in demand for raw milk from domestic dairy processing enterprises. Surpluses of raw milk appeared on the domestic market, which restrained the growth of purchase prices. In 2024, butter prices were the main driver of the growth in raw milk prices.