It’s still early days in 2021, but global dairy markets are showing some really positive signs in the opening weeks of the year.

This week, European spot market prices for dairy commodities increased across the board for butter, cheese and milk powders.

With much of Europe still under tight lockdown restrictions due to COVID-19, retail demand for dairy staples such as butter, cheese, liquid milk and cream is really helping to boost prices.

This strong demand, which follows a record Christmas trading period for the grocery sector across Europe, is boosting dairy commodity prices.

On cheese markets, European prices for cheddar increased to €3,180/t last week, while mozzarella prices increased to highs of €2,700/t.

Meanwhile, European butter prices increased to €3,270/t this week.

On milk powders, healthy demand from export markets is also helping to lift European prices for skimmed (SMP) and whole milk powder (WMP).

ONIL, the Algerian state agency for buying dairy commodities on the world market, is expected to issue a new tender for milk powders later this month, which is helping to boost European powder prices right now.

Spot market quotes for SMP increased to €2,260/t this week, while the price of WMP lifted to just under €2,800/t.

This is the highest price level for SMP in Europe since before COVID-19 hit in March last year.

Whether this bounce in dairy markets can be sustained will be determined by spring milk production levels across Europe in important countries such as Germany, France and the Netherlands.