Amidst a surplus of raw milk and finished products in Ukraine, the cancellation of trade benefits by the EU, and an increase in cheese imports, Ukraine is experiencing a decline in purchase prices, which may continue in the second half of June, reports Georghii Kukhaleishvili, an analyst at the Association of Milk Producers (AMP).
The average purchase price for extra-grade milk as of June 6 was 16.00 UAH/kg excluding VAT, which is 12 kopecks less than a month ago. The price range for this grade on farms varies from 15.50 to 16.50 UAH/kg excluding VAT and has not changed in the last month.
Higher grade milk averaged 15.75 UAH/kg excluding VAT (-18 kopecks). Prices for higher-grade milk ranged from 15.30 to 16.20 UAH/kg excluding VAT. The lower and upper limits of the price range remained unchanged.
The average price for first-grade milk was 15.45 UAH/kg excluding VAT and decreased by 15 kopecks compared to the first half of last month. The minimum price on farms was 15.00 UAH/kg. The maximum price was 15.60 UAH/kg. The lower limit of the price range remained unchanged, while the upper limit decreased by 20 kopecks.
Accordingly, the weighted average price of the three grades was 15.75 UAH/kg excluding VAT, which is 5 kopecks less than the results of the previous monitoring.
Georghii Kukhaleishvili notes that at the beginning of June, the price reduction occurred in the middle of the price range, while the upper and lower limits of the price range for extra and higher grades remained unchanged. However, in the second half of June, a revision of purchase prices by milk processing enterprises is likely, regardless of the types of dairy products they produce. The driver of raw milk price reduction is the surplus not only of raw milk but also of finished dairy products. While there was a balance in the dairy market in May, currently the supply of goods exceeds demand.
The growth of purchase prices in Ukraine will be constrained by the European Commission's reinstatement of quotas and duties on domestic agricultural products from June 5 and the cancellation of autonomous trade measures (ATMs) for milk and dairy products from Ukraine, which since 2022 had allowed domestic processing enterprises to supply their products to Europe without trade barriers. In particular, European traders buy skimmed milk powder and butter from Ukraine, which is cheaper than locally produced exchange-traded goods, and resell these products to buyers from third countries. Milk processing enterprises in Romania and Bulgaria, facing a shortage of raw milk, import Ukrainian skimmed milk powder and reconstitute it for the production of curd cheese and soft cheeses to meet domestic demand. In smaller volumes, Ukrainian dairy products are sold on supermarket shelves under private labels or in ethnic stores in Germany, Poland, Romania, and Lithuania.
The abolition of quotas and reinstatement of duties on Ukrainian products will likely lead to a reduction in dairy product exports to the EU. Specifically, by the end of 2025, Ukraine can ship 5,000 tonnes of skimmed milk powder to Europe under quotas, of which 2,900 tonnes remain available. For comparison, in the first 5 months of 2025, Ukraine already supplied 8,000 tonnes of skimmed milk powder to the EU, and 15,000 tonnes for the entire year 2024. Reorienting skimmed milk powder exports to countries in the Middle East and North Africa will not be an alternative to the European market for Ukrainian companies in terms of revenue. Most likely, domestic milk processing enterprises will have to dump prices to compete with suppliers of exchange-traded goods from New Zealand and South America in these markets and will offer lower prices to milk producers. Restoring cheese and other dairy product exports to pre-war volumes to former USSR countries, particularly Kazakhstan, is problematic due to disrupted logistics chains and competition from producers in Russia and Belarus. The increase in dairy product exports to the EU in recent years occurred in parallel with a reduction in Ukraine's share in traditional sales markets.
Additionally, the increase in the supply of imported cheeses in the domestic market is pressuring purchase prices, hindering the sale of products from domestic cheesemakers. Under such conditions, dairy farms are forced to work on reducing production costs, and increasing milk yield is not profitable at the current stage and will contribute to the weakening of purchase prices. The situation may change if the government of Ukraine and the European Commission manage to agree in the short term on increasing quotas for domestic dairy product suppliers or, altogether, on their abolition for the dairy sector. Amidst declining milk production and cow herds in EU member states due to bluetongue outbreaks and rising butter prices, exchange-traded goods from Ukraine are of interest to European traders, and the reinstatement of quotas contradicts their interests.
Press Service of the Association of Milk Producers
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