While the latest Global Dairy Trade (GDT) average auction result was down a touch, it really doesn’t take the shine off dairy markets that are on a high and continuing to rise.

The best reflection is the Ornua PPI, which climbed again this week to hit 116.8 points and effectively put more daylight between what farmers are getting and what the market is returning.

The main product traded in the GDT auction is whole milk powder (WMP) and it being down 0.5% is a solid result as European production peaks.

On European markets, when butter is over €4,000/t, skim milk powder (SMP) over €2,500/t and WMP over €3,200/t, you are doing OK as a mixed product basket.

At peak, when facilities in Ireland are working hard, SMP is a necessity rather than a choice. While low value, it’s a necessary evil when manufacturing milk is peaking in supply and processors struggle to manage the volumes.

What continues to underpin the market is the fact that supply from some of the big European countries is well back for the first three months of the year.

Germany, France, the Netherlands and Denmark are big players in the milk market and they were all back on milk supply for January to March.

We can’t lose sight of the fact that the reason the Ornua (formerly the Irish Dairy Board) returns improved is the fact that they are getting more from the market now for the basket of goods they sell. Milk prices should soon start to better reflect the market returns.