Dairy markets have kicked off 2019 on a positive note, with European spot prices for most commodities rising in the last week.

On powder markets, the price of skimmed milk powder (SMP) continues to make gains as market sentiment has shifted dramatically over recent weeks.

Highest level since 2017

Freshly produced SMP is now fetching above €1,800/t on spot markets, which is the highest price level for the commodity since July 2017.

The continued clearance of the European Commission’s stocks of intervention SMP has injected some much-needed life into European powder markets.

If the European Commission sells another large volume of SMP out of intervention at this week’s tender sale, it can be expected we will see continued rises in spot prices for fresh SMP to more normalised price levels.

Whole milk powder

Whole milk powder (WMP) prices are also benefiting from the clearout of intervention stocks.

Spot prices for WMP in Europe have risen a further €50/t in the last week and are trading in the region of €2,750/t to €2,800/t.

On the fats side, there is a similarly positive story, with prices for most commodities kicking off the new year on a positive footing.

Momentum

Butter prices have found some upward momentum, with spot markets trading in the range of €4,300/t and €4,400/t last week.

The Dutch Dairy Board reported a butter price of €4,140/t last week, which will be expected to rise for this week.

Cheese markets are steady across Europe, with cheddar trading around the €2,900/t mark.

For the coming months, Europe will set the tone in global dairy markets, depending on the amount of milk produced by the large dairy countries in the EU, including Ireland.

A big spring flush of milk from Europe would test market resolve, although the imminent clearance of the European Commission’s SMP stocks is a major plus for dairy market sentiment in 2019. Time will tell.