The Global Dairy Trade (GDT) auction on Tuesday saw the index increase by 2.5% following an increase of 3.2% at the previous auction.

Whole milk powder (WMP) and skim milk powder (SMP) increased by 5% and 1.5% respectively. These are important ingredients, as powders make up a high proportion of goods produced by Irish co-ops.

Butter and cheddar also increased in price, rising by 2.4% and 4.5% respectively.

However, closer to home, butter prices took a hit, dropping by 1.5% or €70/t to €4,570 on the European spot market. Converted to US dollars, this price is very close to the GDT auction price for butter.

Elsewhere on the European spot market, WMP increased by €10/t, SMP by €40/t and cheddar by €55/t after an overall positive two-week period, with improved sentiment and improved prices across the board.

Positive trends from New Zealand must be tempered with the fact that the quantities being sold are smaller than they have been, with about 23,000t of product moving compared with the more normal 30,000t during the main production season.

However, higher prices are higher prices and the market seems to be improving.

The widely reported cuts to milk prices by retailers won’t have any real impact on farmgate milk prices in Ireland, but will have negative impacts on the profitability of liquid milk manufacturing, which is already operating at break-even at best. These price cuts will have a greater impact on British milk prices. I see milk supplies there are up 0.1% compared with last year.