Dairy prices in Europe remain firm this week on the back of lower production in April and the spike in demand created by the 2018 World Cup in neighbouring Russia. On the supply side, milk production in a host of large producing countries was down in April due to the difficult weather.

Dutch milk production in April was down almost 2% year on year to 1.15bn litres, while Irish milk production for April was down almost 6% year on year at 811m litres. In the UK, milk collections were back less than 1% at just under 1.3bn litres.

The only major European milk producer to see a rise in production was Poland, where milk collections for April increased 4% to 983m litres. Markets will be closely watching production figures for April from Germany and France, Europe’s two largest producers, which are expected to be published this week.

On the demand side, the World Cup remains the biggest show in town and is underpinning demand. Cheese prices have been very strong in recent months. Spot prices for mozzarella, an important cheese for pizza makers, hit new highs of €3,450/t this week, which is more than 40% higher than where prices started the year.

Cheddar prices are also firm around the €3,250/t mark this week, while butter prices are still trading above the €6,000/t mark.

On powder markets, skimmed milk powder (SMP) continues to make incremental gains, with spot prices rising to €1,600/t this week.