If rising grain prices and lower milk volumes have given global dairy markets a lift in recent weeks, it certainly is not being reflected in the futures market at present. Futures contracts for WMP declined in value by almost 2% over the last week and physical prices remain stubbornly low around the $2,100/t mark.

WMP prices actually fell close to 5% at last week’s GDT auction and market analysts believe that prices need to recover to the region of $3,000/t for a recovery in dairy markets to really take hold.

While milk powder prices remain weak, while we have seen a definite uplift in the price of butter and cheese over the last fortnight. At last week’s GDT, average butter prices rose by more than 5%, while cheddar prices surged by 7%.

Europe

Similarly, in Europe, butter and cheese prices are on an upward trend in the last month. European butter prices have strengthened by more than 6% in the last two weeks to break the $3,000/t mark, while cheese prices increased by 2% to sit at just below $3,000/t.

The lift in prices has led Dutch processor FrieslandCampina to announce that it will increase its sales price for cheese due to improved balance in supply and demand. The group also said it was seeing the first signs of change on the world market, allowing it to begin increasing prices of basic dairy products.

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