Milk processors in Germany are preparing for even more price pressure from their supermarket customers this summer as markets for dairy products get progressively weaker.
At E3.25 per kg on the Cologne exchange this April, butter was only saved from sinking further by the European Union intervention price. In April, skimmed milk powder (SMP) for human consumption was being kept just above the EU safety net price, but SMP of less than intervention standard was selling well below this level.
In Germany these developments have not gone unnoticed by the leading retailers and they are already negotiating for substantial price reductions. New contract prices for UHT milk, for instance, are said to be 5% down on Christmas levels, with reductions of E0.03 per litre and more.
The Russian crisis is expected to cause similar problems with German cheese as sales are negotiated for the estimated 80,000 tonnes of product that will not find buyers in Eastern Europe this year.