While the processing sector aims to try to secure enough gas to continue processing through the year, dairy farmers are attempting to secure enough feed and fertiliser.

Both have challenges.

The upside is the market continues to move ahead, as supply in any part of the world is not increasing, while demand is good.

Spot markets reflect current-day supply and demand and this week we see the German stock market price for spot milk, as calculated by the IFE in Kiel, is close to 70c/l.

This is the calculated raw material value on the basis of the product yield of butter and skimmed milk powder.

It doesn’t mean much, but it shows that stocks of product are low and in dairy farming, production continues to lag behind last year, with little hope of rapid improvement.

In Germany, milk supply remains almost 2% behind last year; in France, milk supply is also behind. Remember, these are the biggest two European players in milk processing.

The rate at which dairy prices are picking up in Europe is astonishingly fast. Meanwhile, butter, milk powder and cheese prices have risen to unprecedented levels.

In the United States too, dairy prices have been increasing, but probably not as quick as European prices.

The government has been supporting the sector through COVID-19. For example, European butter is almost $1,800/t more expensive than American butter. Normally, European butter is several hundred dollars more expensive.

This means that the competitive position of European exporters, such as Ornua from Ireland, has, in theory, deteriorated considerably.

There is little or no butter stocks in place in the US, with recent statistics showing stocks 25% less than the same month last year.