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Ukraine: Raw milk purchase prices to decrease

 

After a surge in consumer demand in retail caused by introduction of the COVID-19 emergency situation, the dairy market of Ukraine is expectably stabilizing and demand is reducing. 

In retail trade, the demand is falling only now, but in HoReCa it collapsed two weeks ago.

Exporters also can not boast of success, even despite the devaluation of hryvnia.  At the same time, the rise in price of logistics cannot be considered as the main argument.  Indeed, due to the widespread closure of borders, the supply chains are limited or even broken.

All this gives reasons to think that in dairy commodity market we should expect a decrease in prices.  And in the category of households, milk purchase prices decline has already begun.

Good weather promotes grass growth and a seasonal increase in milk production.  The supply side of the market increased also due to the restriction on trade in bazaars and markets and violation of dairy product sales channels for HoReCa.  Thus, more raw milk poured into industrial processing and, above all, into production of milk powder, casein and butter.

This resulted in more active decline in purchase prices of milk produced in population households throughout the country.

The decrease in the cost of raw milk bought from agricultural enterprises was restrained by the growth of consumer demand in retail, but the situation has already changed and it will continue to change even more in early April.  The raw milk market is waiting for a wave of mass price revision, regardless of milk quality and supply volumes.

The situation in Ukraine and the world is changing very dynamically and, unfortunately, forecasts of consumer market trends are not optimistic.  However, the dairy industry in Ukraine is not in the worst situation.  Internal and external factors allow to assume that in comparison with other sectors of economy, the dairy industry can count on minimal losses.

INFAGRO

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