Like other areas of the global economy, dairy markets are quite nervy this week following the outbreak of coronavirus in China. Many major cities in China are on lockdown as the world’s most populous country tries to contain the deadly virus.

As a result, the normal supply chains and distribution channels in China are severely disrupted, with many Chinese importers trying to postpone dairy deliveries until health authorities get to grips with the virus.

With such disruption in China, the world’s largest dairy buyer, it was therefore no surprise to see average dairy prices fall sharply by almost 5% at this week’s GDT auction.

The benchmark dairy index was led lower by a 6% decline in the average selling price of whole milk powder (WMP) to $3,040/t (€2,760/t).

Skimmed milk powder (SMP) didn’t fare much better, with average prices down 4% to $2,907/t (€2,640/t).

Between them, WMP and SMP account for more than 75% of all the product sold on the GDT.

Closer to home, European dairy markets held steady in the past week.

Cheese markets continue to firm due to tight stocks and healthy demand from international export markets. Cheddar prices increased another €50/t this week to hit €3,200/t, while mozzarella prices rose to €3,125/t.

European butter prices continue to hold steady at just under €3,600/t, although German supermarkets have set a lower retail butter price for the month of February. SMP prices are firm at €2,640/t and are underpinned by strong export demand.