Dairy markets continue to improve as the slowdown in EU milk production registers across the globe. In Europe, average quotes for butter have risen a further 7% in the last fortnight close to $3,700/t, while cheddar prices are up more than 3% to $3,160/t.

The EU’s intervention scheme is also beginning to impact the market in a positive way. With more than 350,000t of skimmed milk powder (SMP) now in storage, the market has tightened up a little, with available stocks lighter on the ground.

As a result, SMP prices are beginning to rise slowly from intervention levels – almost 4% in the last week to just under $2,000/t.

Similarly, quotes from the Dutch Dairy Board this week show further gains in the price of butter (+3%), skimmed (+2%) and whole milk powder (+4%). As a result of this sustained upward trend, FrieslandCampina, the Dutch dairy processor, has announced a 1c increase in its farmgate milk price to an equivalent of 0.27c/litre.

Friesland said it had lifted milk prices following increased quotes for almost all dairy base products, with butter and cheese as outliers.

Arla, the Danish dairy processor, has said it expects to lift milk prices at the back end of this year having paid a little under 0.30c/litre in the first half of 2016 to farmer suppliers. “We see a positive trend taking hold as milk production is declining again in Europe and prices are starting to go up,” said chief executive Peder Tuborgh.