A quick glance at European spot market prices for most dairy commodities shows that dairy markets appear to be in a decent position heading into the final months of 2020. Butter is stable at €3,350/t, while cheddar prices have actually increased in recent weeks to €3,250/t.

On the powder side, whole milk powder (WMP) prices are creeping higher at €2,710/t this week, while skim powder (SMP) prices are down slightly to €2,170/t. On the face of it, dairy markets are stable but reports from traders suggest actual volumes being sold are quite low right now.

Most buyers are covered until the end of the year at this point. In a normal year, many buyers would be making plans for 2021 and looking to secure supplies months in advance of next year, which would keep trade flows moving. But this is not a normal year.

Wait and see

There is huge uncertainty in markets right now and many dairy buyers seem happy to sit on their hands with a “wait and see” approach. The uncertainty hanging over all markets – be they dairy or financial – is coming from a number of sources right now, including the US election next week, the impending Brexit deadline as well as the rapidly rising number of COVID-19 cases worldwide.

Dairy markets have navigated the COVID-pandemic exceptionally well this year and it is hoped this can continue into next year. Add in a Biden win and a Brexit deal and suddenly the outlook for 2021 becomes a lot more manageable.