Europe’s dairy market has found further upward momentum this week, as buyer activity continues to ramp up ahead of the important autumn-winter period. On top of this, buyers have resumed stockpiling ahead of the latest Brexit deadline on 31 October.

A shortage of cream has seen spot prices for butter jump higher again this week to €3,430/t. Cheese markets across Europe remain very steady, with cheddar prices holding firm at €2,900/t, while mozzarella is around €3,000/t.

On powder markets, the price of whole milk powder (WMP) has lifted further this week to €2,860/t, while the price of skimmed milk powder (SMP) has risen to €2,180/t.

As dairy prices rally in Europe, milk production in some key producing countries continues to weaken. In Germany, the EU’s largest dairy-producing state, milk production for July stood at 2.7bn litres, which is down more than 1% on the same month last year. German milk production has now contracted for six of the first seven months of 2019 and is running almost 1%, or 130m litres, behind last year.

Meanwhile, in the Netherlands, phosphate quotas continue to limit Dutch milk production. For July, Dutch dairy farmers pumped out 1.1bn litres of milk, which is down 1.5% on last year. For the first seven months of 2019 (Jan-July), Dutch milk production is down almost 3% at 7.85bn litres.

However, it is anticipated that European milk supply will begin to respond to decent prices over the coming months and the first half of 2020 could see a return to milk production growth in many large producing countries across Europe.