Dairy markets were relatively flat this week, with falls for butter, but small rises for powders on the European spot market.

Butter prices fell by €150/t to €5,810/t. It took a huge jump two weeks ago, so the drop this week isn’t unexpected.

On powders, the gains were modest, with whole milk powder (WMP) rising by €20/t and skim milk powder (SMP) rising by just €10/t, which represent stability more than anything.

Over at the Global Dairy Trade (GDT) pulse auction, powders took a bigger hit, with WMP falling by 1.7% and SMP falling by 3.8% to get aligned with the prices paid at the main GDT auction last week.

Milk supply in the Netherlands is back 7.8% in February compared with last year, which is a substantial drop, even though the fat content in the milk was a lot higher in the month just gone. Supply is also back in New Zealand, with January supplies running 1.19% below January 2023 levels.

However, the much forecasted drought as a result of the El Nino weather event in New Zealand hasn’t materialised and grass growth remained good all summer in most places, meaning milk supply will stay up.

This is despite many forecasts to the contrary. What happens in New Zealand is important, as it’s the biggest player on the global market.

Australia is bucking the trend, recording an increase of 5.2% for January 2024 compared with 2023, with an overall increase of 1% forecasted for the year. The drop in supply in both Ireland and Netherlands for February is significant and based on current weather, we can expect the same for March.