Dairy commodity prices across Europe are beginning to react to the recent heatwave that has swept the continent in the past six weeks, particularly in Northern Europe. The extended spell of dry weather has seen milk collections in some regions of Europe fall between 5% and 10% in recent weeks, with the fat and protein content of milk also suffering.

Up to now dairy markets in Europe had shown little reaction to the hot weather as it is the seasonally quiet holiday period for many buyers. In the last week, however, dairy markets have showed signs that prices are beginning to rise in response to tighter milk supplies.

Cheese prices in Europe have started to climb upwards once more, having been in retreat since peaking during the World Cup tournament in Russia. Spot market prices for gouda and mozzarella both increased in the last week and are now trading around €2,900/t and €3,250/t respectively.

Cheddar markets are in a healthy position with prices holding firm last week around the €3,150/t mark.

Butter markets are also steady in the last week with spot prices trading in and around €5,300/t. Butter prices submitted to the Dutch dairy board were stable last week at €5,250/t.

In contrast, milk powder markets continued to be weighed down by the not insignificant volumes of skimmed milk powder (SMP) that remain in intervention storage across Europe. The ready availability of intervention SMP has kept the price of freshly made SMP below €1,500/t for some time now.