Ukraine’s Milk Prices Likely to Stabilize After Holiday Dip

Despite a rise in raw milk prices, experts believe there is no basis for continued increases in Ukraine’s dairy market due to reduced export activity during the New Year holidays.

Raw milk prices in Ukraine have been rising, but experts suggest that this trend may not continue due to a drop in export activity during the upcoming New Year holidays. This insight comes from Georgiy Kukhaleishvili, an analyst at the Ukrainian Milk Producers Association (AVM), as reported by the association’s press service.

As of December 10, the average purchase price of extra-grade milk was 19.70 UAH per kilogram (excluding VAT), which is 65 kopecks higher than it was a month ago. Milk of higher grades averaged 18.70 UAH per kilogram (excluding VAT), which saw a rise of 30 kopecks. The price of first-grade milk was 17.65 UAH per kilogram (excluding VAT), an increase of 50 kopecks compared to mid-November. Overall, the average weighted price of the three grades of milk stood at 18.68 UAH per kilogram (excluding VAT), up by 48 kopecks from the previous month.

Kukhaleishvili noted that while raw milk prices continue to rise in Ukraine, the pace has slowed compared to the previous month. The demand for raw milk and finished dairy products still exceeds supply, although the situation is beginning to change.

Experts believe the ongoing price rise is unlikely to continue. “The decrease in the volume of exports of dairy products is likely to curb further price increases. Market activity will probably slow down during the New Year holidays in Europe, and Ukrainian producers are expecting lower sales of fresh dairy products due to the higher prices in recent weeks,” said Kukhaleishvili.

He also mentioned that milk deliveries from household farms have been decreasing. However, factories producing butter and powdered milk are not ready to purchase milk at high prices due to the fall in butter prices in Europe. The price of butter in the European Union dropped from 8.50 euros per kilogram in October to 6.50 euros per kilogram now, while raw milk prices on the spot market have remained almost unchanged since December 1.

With the current raw milk prices in Ukraine, the situation could resemble 2023 when local companies began importing butter, which halted further price increases. A similar scenario may occur in the cheese sector as European products are cheaper due to subsidies and lower production costs.

The AVM emphasized that the price of extra-grade milk in Ukraine, which is 51.60 euros per 100 kilograms, is almost equal to the average European price.

Milk prices have also been rising in several other countries, including New Zealand, where prices have increased by 30%. However, given the decline in prices on commodity markets, no further price hikes are expected in Ukraine.

In October 2024, the volume of dairy product exports from Ukraine decreased due to the raw milk shortage and falling butter prices in the European Union.