The last 10 days has seen a real boost in dairy market sentiment. Drought conditions in Europe, coupled with returning demand as economies reopen, has seen commodity prices for butter, cheese and skimmed milk powder (SMP) all rise strongly over the last two weeks.

Butter prices came into May trading below €2,600/t, but there’s been a very strong recovery since. Prices have rallied more than €500/t over the course of the last month and, this week, spot prices for butter are trading at €3,100/t. In Germany, the retail price for butter for June has been set even higher at €3,200/t.

Likewise, SMP prices started May trading below €1,900/t. Markets have since rallied and pushed SMP prices close to €2,200/t this week. On cheese markets, cheddar got a real shot in the arm over the last week, with spot prices jumping as much as €200/t in a single week to hit €3,050/t. By any measure, this is a very healthy price level for cheddar.

Mozzarella prices also continue to firm. In the last week, mozzarella prices jumped €150/t to hit €2,700/t.

At the same time as demand is resurgent across Europe, warm weather is increasing drought fears across continental Europe and what that could do to French, German and Dutch milk production over the next month or two.

Meanwhile, Chinese import demand remains strong. For April, Chinese dairy imports were up again, with higher demand for WMP (+22%), infant formula (+10%), butter (+6%) and caseinates (+19%).