There was a small glimpse of rising dairy demand this week. Despite the economic slowdown, China’s imports of skim milk powder (SMP) were up in December 2015 compared with 2014. However, SMP has fared better than its imports of whole milk powder (WMP).

Global Trade Atlas data in December 2015 showed China imported nearly 14,800 metric tonness of SMP, a 5% increase compared with December 2014. However, for all of 2015, China’s SMP imports of 200,267 metric tonnes were 21% below 2014.

The three key drivers of the lower dairy product prices are the Chinese economic slow-down, the Russian ban and the lower demand from oil-producing countries now that oil prices are so low.

Back home, the Ornua (formerly Irish Dairy Board) purchase price index (PPI) of dairy commodities dropped by 2.4% to 85.7 for January 2016 (24.2c/litre).

The drop follows the third consecutive fall in the Global Dairy Trade (GDT) index since the beginning of 2016. Last week, the index fell by more than 7%.

Spot prices

On spot prices, the latest Dutch prices rose slightly to 22.5c/l from 20c/l. The latest quotations from the Milk Market Observatory show EU prices continuing to decline, with quotations for butter down over 5% from $3,187 to $3,023/t. WMP prices dropped another $100/t, falling from $2,409 to $2,296/t. Cheddar was the best performer and just about held price at $3,060 relative to $3,080/t last time.

The quotes from Australia and New Zealand more or less held steady compared with last week. Butter, SMP and WMP all held, while cheddar rose in value slightly from $2,963 to $3,125/t. Quotes from the US again held firm and there was a slight rise in the quote for WMP, from $2,800 to $2,965/t.