There was an uplift in dairy prices on the European spot market this week, with butter up €35/t and whole milk powder (WMP) up €65/t.

The increases in butter and WMP this week follow a better than expected auction result at last week’s Global Dairy Trade event, where the overall index increased by 3.2%.

Positivity didn’t extend into the cheese or skim milk powder (SMP) market, with spot prices falling by €70/t and €10/t respectively.

Looking at the spot market prices over the last three or four months, there definitely seems to be a stabilisation.

Declines flatten out

The steady week-on-week declines in prices which kicked in last October and continued at the same pace until January seems to have flattened out since then.

Yes, there is some bobbing up and down – a rise one week followed by a fall the next, but still relatively flat. This indicates that the bottom of the market has been met.

It’s important to note that this bottom is still historically high, with butter €900/t dearer now than June 2021.

Getting prices up again will need a trigger – either increased demand or lower supply. In order for supply to drop, farmers need to feel some pain and with feed prices still high across Europe and the US and milk prices falling, it is expected that supply will start to fall too.

Reports in Britain suggest supermarkets are starting to cut the price of butter, which might stimulate demand, if replicated across Europe. China seems to be static – but a Bord Bia trade mission next month might flush out some buyers.