The excess of the Christmas period tends to come as a boost for dairy markets, as the surge in consumer demand pushes prices up. However, dairy commodity prices across Europe came under further pressure this week as milk collections across Europe rebound.

The three largest milk producers in Europe – Germany, France and the UK – are all reporting increases in supplies over recent months.

At the same time, Ireland will continue to expand, while the phosphate dilemma has not had the anticipated impact in the Netherlands.

Skim drag

However, the biggest drag on sentiment remains the 380,000t of skimmed milk powder (SMP) sitting in EU intervention.

These stocks have acted like a deadweight on milk powder prices for the last 18 months and will continue to do so until a resolution is found.

This week, SMP prices reported by the Dutch Dairy Board fell to a new low of €1,420/t. Whole milk powder (WMP) prices fell to €2,400/t this week, which is its lowest price point since August 2016.

Europe’s butter market continues to find a new more sustainable level as prices fell almost 7% this week to hit €4,340/t.

Dutch butter prices have now come back €2,350/t since the start of October, as the new butter inventories come online.

The big hope in Europe’s dairy industry will be to see further improvement in oil prices, which would boost the buying power of oil economies that account for 30% of all global dairy imports.

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