As most countries in Europe move to reinstate some form of COVID-19 restrictions in a bid to stall the virus, the European food service industry is once again braced for a difficult number of weeks leading up to Christmas, with restaurants, bars, cafés and other food service outlets all forced to close once again.

The current public health restrictions in Ireland and other European countries are not as severe as what we had in March and April and many food service outlets are much better prepared this time around to provide take-away and delivery options to consumers.

Yet the restrictions will still have a negative impact overall on the food service industry, which is such an important sales channel for many dairy processors. This impact is already manifesting itself on European spot markets, where prices for butter and cheese were in retreat this week.

European butter prices dropped slightly to €3,300/t this week, while the price of skimmed milk powder (SMP) fell to €2,130/t. On cheese markets, cheddar prices fell to €3,150/t, while mozzarella prices eased this week down to €2,550/t. Right now, the one positive for dairy markets is the continued strong demand from Asia and the Middle East.

Dairy imports by China remain strong in 2020 (+8% this year), while demand from other Asian markets is rising in the second half of the year.

There’s also been steady dairy import demand in the Middle East region (+3% this year), while dairy trade into Africa is up 12% so far in 2020.