It’s only a year since the EU was sitting on an intervention stockpile of skimmed milk powder (SMP) close to 400,000t that was weighing down global dairy markets and farmgate milk prices.

Yet here we are 12 months on and the EU’s intervention stockpile has been sold into the private market and SMP prices are trading at their highest point in five years.

This week, spot prices for SMP increased further and are now trading at close to €2,500/t.

In the last year, SMP prices have risen by almost 60% and are currently trading at their highest level since August 2014.

The big driver of this price growth for SMP has been an apparent insatiable appetite from China. In the first eight months of this year (Jan-Aug), exports of SMP from the EU to China are up more than 60% year on year close to 91,500t.

Yet, at the same time, production of SMP in the EU has only increased marginally by 1.4% in the first eight months of this year. European SMP prices hit record highs of €3,300/t back in 2013.

If the demand from China keeps up at this pace into the new year and European SMP production remains flat, we could see those record prices broken in 2020.

Meanwhile, butter prices in Europe were flat this week at €3,550/t.

Cheese markets remain very steady this week, with cheddar prices trading at €3,000/t, while mozzarella prices remain unchanged at €3,150/t.

Whole milk powder (WMP) is also flat at €3,000/t.