Last Thursday, the European Commission sold almost 42,000t of skimmed milk powder (SMP) out of intervention for a minimum selling price of €1,150/t. In response to the sale, dairy markets have pushed SMP prices close to €1,600/t - the highest since last September.

Since the start of this year, the European Commission has now sold more than 76,000t of SMP out of its intervention stockpile. This signal of intent is welcomed by dairy markets, as the European Commission looks to clear the market overhang created by the build-up of SMP sitting in intervention.

Setting the tone

Events in Europe are setting the tone in international dairy markets at present, particularly as New Zealand’s milking season has almost come to a close. Europe is currently in the middle of its milk production peak, but dairy commodity prices are holding steady.

On the fats side, cheese prices have remained unchanged in the last week, but overall remain in a healthy place. Butter prices have continued to firm across Europe as supply remains tight. Spot prices for butter are trading very close to €6,000/t, while futures markets have priced August and September delivered butter above the €6,000/t mark.

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