It will be interesting to watch how dairy markets digest the latest milk production figures out of New Zealand (NZ). Data released this week shows NZ milk production for October, which is the month for peak supply, increased almost 3% to just over 3bn litres.

This brings NZ milk production for the 2017/18 season to date (June to October) to a cumulative 7.14bn litres, which is almost 1% ahead of the same period last year. The return to supply growth in October follows two months of decline, where September and August production was down almost 2% each month due to very wet weather.

While the wet spring weather impacted in early October, good grass availability and excellent grazing conditions as the month wore on resulted in strong milk collections.

Closer to home, dairy commodity prices reported by the Dutch Dairy Board this week are mixed.

Butter prices have remained flat in the last week around the €5,000/t mark and the serious overheating in the market appears to have cooled to a sustainable floor.

In contrast, the outlook for powders remains bearish.

Whole milk powder (WMP) prices fell another 2% this week to €2,500/t, while the market for skimmed milk powder (SMP) has found a new bottom of €1,460/t. Reports suggest the market for freshly produced SMP is short. However, with the EU’s intervention stockpile still overhanging the market, the potential for any upside in price is totally negated.

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