When we look back on it, 2020 has been one of the most rollercoaster years in recent history for dairy commodity prices.

In January, the outlook for dairy markets was really quite positive.

Milk supply in Europe and New Zealand was subdued and global demand for dairy was looking really strong.

COVID standstill

And then in March, COVID-19 brought the global economy to a standstill and dairy markets came crashing down.

In the space of just two weeks, prices for butter, cheese and milk powders had plunged to a really weak level.

The price falls were happening so fast that many in the industry were saying 2020 could be worse for milk prices than after the global financial crash in 2009.

Yet, despite significant headwinds, dairy markets began to recover in late May/early June and prices are practically back to where they were at the beginning of 2020.


In Europe, milk powder prices are still down 10% to 15% on where they were at the start of 2020, but the direction of travel in recent weeks has been all positive (see Figure 1).

Interestingly, the resurgence in demand for dairy fats has allowed prices for butter and cheese to recover fully from the initial impact of COVID-19 (see Figure 2).

In recent weeks, European butter prices have climbed back to just under €3,600/t, which is a really healthy price level.

European milk powder prices are still down 10% to 15% on where they were at the start of 2020.

Similarly, European spot prices for cheddar cheese have rallied back strongly since the summer and prices are just 5% down on where they started the year.

New Zealand

It’s an almost identical story in New Zealand, where dairy commodity prices are back to where they started the year.

Since September and the start of the New Zealand spring flush of milk, butter and cheddar prices on the GDT index have rallied really strongly (see Figure 3).

Butter prices are now 5% ahead of where they started the year at €3,460/t, while cheddar prices are also in a really healthy position at just under €3,200/t.

On the powder side (see Figure 4), the price of New Zealand-made whole milk powder (WMP) has recovered fully since May and now sits at just over €2,630/t.

New Zealand skimmed milk powder (SMP) prices have also recovered fully to stand at €2,400/t at year-end.