Now that we’re into October and the final quarter of 2018, Europe’s seasonal milk production curve is beginning to wind down for another year. When we look back on 2018 in terms of milk prices, it will have proven to be a year that turned out a lot better than originally forecast.

In January and February, the milk supply picture in Europe was exceptionally bullish and dairy market prices were looking extremely weak as a result. However, a prolonged winter and a summer drought kept a lid on any explosion in European milk supplies and dairy commodity returns responded positively. A second year of soaring butter prices also helped.

However, the 2018 season is winding down at just the right time in Europe, which should allow some room for dairy markets to breathe. Over the last fortnight, spot prices for butter, cheese, skimmed milk powder (SMP) and whole milk powder (WMP) have all been under downward pressure.

In New Zealand (NZ), the GDT index is faring worst of all, where dairy commodity prices continue to slide month on month. This is likely a reaction to the strong start to the 2018/19 milking season in NZ, which is running 6% ahead of last year in the first three months of the year (Jun-Aug).

For Irish farmers drying off cows this winter, the hope will be that, come next spring, dairy markets will have found renewed momentum. The next five months of milk production levels in NZ will be crucial in setting the tone for dairy markets in 2019.