This week, the markets suggest a levelling of powder prices, but a continuing downward decline in cheese prices.

It’s fair to say that cheese prices have been moving down for almost 10 weeks now and this is reflected somewhat in the prices paid by Irish processors that are heavily dependent on cheese.

The analysts suggest a lack of demand is partly the reason. The autumn milk supply push is probably also to blame, as more processors in mid-summer switched into cheese.

While Ireland’s processors are not heavily dependent on Gouda or Edam, we have seen prices fall from €5,200/t to €4,400/t.

Cheddar and mozzarella, which are more reflective of cheeses from Irish processors, are almost in the same boat.

The reality is when gas price rose, cheese gave good returns compared with milk powder. Cheese supply was tight and it made sense from a product and cost of processing perspective.

China’s demand for powders wasn’t as good, so cheese became the product of choice.

Milk supply has increased in some of the EU countries as farmers react to higher prices. Remember, these countries have a relatively flat supply profile compared to us in Ireland.

Germany is a big player in the EU milk market and more milk is being produced there at the moment. Belgium, Poland, France and the Netherlands are all producing more milk.

Europe-wide, there was an increase of 0.5% in September, while in the first months of 2021, there was a reduction of 0.4%. Germany and France are up 1.23% and 0.5% respectively.