RussianDairy.com: Spring flush of milk output is abolished – the price surges

According to the Dairy Market Research Center RussianDairy.com, in June-July 2013 raw milk price in Russia is moving up for the first time ever.

According to the Dairy Market Research Center RussianDairy.com, in June-July 2013 raw milk price in Russia is moving up for the first time ever. In June 2013 an average actual price in Russian Federation passed 18 rubles, and as of 7 July 2013 settled at 18.47 rubles per liter including VAT.

It is already obvious that summer season 2013 is abnormal: summer prices for raw milk have never demonstrated this kind of dynamics. July is traditionally a month of maximum production volumes and lowest prices. Moreover, according to market participants, some regional traders are ready to pay 1-2 rubles more in the nearest future, what means, that the price may reach 21-22 rubles per liter in August.

RussianDairy.com experts link the current situation to catastrophic situation of the dairy sector: during the last years and especially this year milk herd population shows continuous decrease. Main reasons for that are draught in 2012, lack of feed and also changes in subsidizing schemes.

Market players – both producers and processors – are highly concerned about the current situation. Raw milk price increase will move dairy products prices up in September 2013, this, in its turn, will affect the consumer demand. By the way, when the raw milk price is down, milk producers will be forced to cut milk herd again. Though at the moment high raw milk price doesn’t encourage farmers to increase dairy cattle population – they are afraid of price fall and following difficulties.

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