The European Commission has sent a further signal to dairy markets of its intention to dispose of its remaining SMP stock sooner rather than later. The Commission this week agreed to increase the frequency of its tender sales of the remaining 282,000t of skimmed milk powder (SMP) that is sitting in intervention stores across the EU.

The European Commission will hold a single tender sale in both August and September, but has announced it will hold two tenders sales in both October and November. The Commission will return to a single tender sale for the month of December.

Depending on market supply and demand, the European Commission clearly sees an opportunity to punch a further hole in its intervention stockpile of SMP in the back end of 2018. While SMP markets had shown some recovery in recent months, prices for SMP in the last fortnight have been under slight downward pressure. European spot prices for SMP in the last week have traded below €1,500/t.

Overall, Europe’s dairy market is quiet as we move into the holiday period. Butter prices are holding above €5,000/t, while cheese markets, which are seasonally quiet, traded slightly lower in the past week.

Hot weather in Europe, particularly with what’s happening with the drought conditions in the UK and Ireland, are being monitored closely by dairy buyers and sellers alike. Dairy prices have not reacted in any material way to the weather conditions as yet but expectations are growing that prices will start to respond if there is no rain this week.