Global dairy markets have caught fire over recent weeks, as fears increase among dairy buyers that product shortages could become a problem later this year.

Last week’s soaring increase in dairy prices from the GDT index in New Zealand was driven by China’s insatiable appetite for dairy right now, as many Chinese buyers fear there could be shortages of stocks in the coming months.

The continued shortage of containers in the global shipping industry is a big driving factor of these supply fears.

Additionally, milk production in a number of key regions is looking quite weak for the first half of 2021.

In Germany and France, the two largest milk-producing countries in Europe, reports suggest milk supply so far this year is down 2% to 3%, which is significant.

Reports suggest very poor fodder quality in France and rising feed prices are putting the brakes on milk production, despite the very strong milk price outlook.

Meanwhile, European dairy prices lifted further this week.

European cheese prices continue to rise, but cheddar is now priced at just under €3,400/t.

Butter prices shot up 8% this week to more than €4,000/t, while milk powder prices also posted healthy growth.

Dairy market traders will remember when butter prices spiked to record highs of €7,000/t not so many years ago, which could drive short-term demand for butter as buyers try to lock down supply at current price levels.

Overall, the outlook remains extremely positive for Irish milk prices in the first six months of 2021.