Dairy product prices fell by an overall 0.6% at this week’s Global Dairy Trade auction run by Fonterra. The relative stability hides some significant changes on individual commodities. Butter was up by 4.9% to $2,940 and whole milk powder 3.4% higher at $2,804 per tonne. As recently as the February auction, whole milk powder traded at $5,000 per tonne.

Weekly dairy commodity prices reported yesterday by the Dutch Dairy Board showed further falls, with skim milk powder down a sharp 10% – from €2,400 to €2,150 per tonne.

Whey fell 7% to €810 per tonne, while butter and whole milk powder were both 4% weaker than last week.

In the year to date, powder prices quoted by the Dutch Dairy Board are 35% weaker, while butter is 18% lower.

The past two weeks have seen particularly sharp falls in response to the Russian ban on EU imports.

There was 260,000t of EU cheese sold to Russia last year, much of it from Dutch and German processors who now have to find alternative outlets. Ultimately, the world market will rebalance – and it is noted that Russia has not banned New Zealand as a potential supplier.

Traders hope that the lower prices will tempt more buyers back into the market from September. A rebound in Chinese demand is essential.

Meanwhile, on the back of high milk prices and low feed costs, July milk production in the United States was up 3.9% on the same month last year.

Milk production per cow was 3.4% higher. The number of milking cows was 9.27 million head, 37,000 head more than July 2013, and 5,000 head more than June 2014.