Spot milk prices lifted again this week and Dutch spot prices are up to 20c/litre. While they are still low, they are a good bit higher than the 10c/l figure a number of weeks ago.

The latest quotes for dairy products this week were mixed. In the EU, butter quotes lifted from $3,094 to $3,187 (+3%), skim milk powder lifted from €1,811 to $1,843, but whole milk powder remained the same at $2,416, while cheddar quotes dropped slightly from $3,108 to $3,080/t.

In Australia and New Zealand, butter and skim dropped, powder held the same, but cheddar dropped significantly from $3,175 to $2,963.

US butter quotes actually rallied upwards from $4,491 to $4,726 (+5.2%).

However, whole milk powder dropped by nearly as much – $2,965 to $2,800/t (-5.6%).

In terms of supply, US supply finished up 1.2% on average for the year. December lifted 0.7%, similar to November which also finished 0.7% up on the previous year.

Australia had a difficult month in December, with drought reducing supply. Parts of Western Victoria were extremely dry in December and this caused milk intakes for that region to drop by 11.6%.

New Zealand milk production fell, but not to the same extent as Australia. Farmgate milk prices remain weak, contributing to the recent declines in milk production.

In early December, Fonterra reaffirmed its forecasted price of $4.60/kg MS, but revised the projected annual NZ milk production forecast from a 5% year-on-year decline to 6% for the season.

The recent increases in New Zealand cow and heifer slaughterings have corresponded with the decline in milk production. Additional heavy culling is expected to continue.