Global dairy markets caught fire this week with major price spikes right across the commodity spectrum.

While dairy prices have been on an upward trajectory since the start of the year, the surge in prices this week for butter, cheese and milk powders has injected real positivity into markets.

The latest GDT auction in New Zealand set the tone with average dairy prices soaring 15% this week to leave the benchmark GDT dairy index at its highest level in seven years. The GDT index has not recorded this sort of price inflation since the glory days of 2013 when milk prices soared to decade highs.

This week’s GDT auction was led higher by a 21% increase in the average price of whole milk powder to €3,620/t, while skimmed powder increased 4% to €2,740/t. The price of butter shot up 14% at this week’s GDT to just over €4,830/t.

European dairy markets responded to the latest GDT auction with prices for butter, cheeses and milk powders all increasing.

European butter prices saw a sharp increase this week to €3,770/t. However, New Zealand butter still commands a €1,000/t premium over European butter, meaning there is room for further price increases for Irish butter.

On cheese markets, cheddar prices increased above €3,300/t, while there were also gains for other cheeses like mozzarella, emmental and gouda.

European milk powder prices also increased this week but remain behind New Zealand prices. This week’s surge in dairy markets should provide Irish farmers with confidence that a year of strong milk prices lies ahead.