Dairy markets were a bit more mixed this week on the European spot market, with whole milk powder (WMP) dropping by €25/t to €3,510/t and cheddar cheese dropping by €85/t to €3,810/t.
However, skim milk powder (SMP) continued to soar this week, rising by €85/t to €2,625/t – the highest price since 1 March this year. Butter prices continue to rise also, with a tonne of butter increasing by €70 on the spot market to hit €4,890/t, which again is the highest since March.
I wouldn’t read too much into the drop in WMP prices just yet. They have increased considerably in the last few weeks, so it could be a case of just finding the natural equilibrium.
Last weeks’ Global Dairy Trade auction saw prices for WMP and SMP jump by 4.2% and 4.3% respectively. There are also strong indications on the futures market that demand for dairy is looking better, with buyers locking in to higher prices for 2024.
Data for milk supplies in Europe for the month of August are in and it shows that the growth of milk supply is slowing, but still growing.
Big countries like Germany are up 0.7% for August, but up 2.4% for the year to date compared to the same period last year.
In contrast, France is down 1.8% for August and down 2.3% for the year to date. Netherlands is up 0.3% for August and up 2.6% for the year to date. On a year to date basis, all of Europe is up 0.7% compared to last year.
Meanwhile, production in New Zealand is down 2.1% and the US is down 0.2% compared to August last year.