Positivity in dairy markets continued this week, with three of the four main commodities recording price increases in Europe.

Cheddar rose €50/t, while powders made stronger gains. Whole milk powder (WMP) increased €175/t and skim milk powder (SMP) was up €100/t. Butter remained the only unchanged product at €4,000/t.

The continued improvement in powder prices suggests stronger international buying, while tightening European milk supplies are also providing support.

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European spot milk prices strengthened further to between 40c/l and 45c/l, reflecting the impact drought is having on milk output.

Whey prices in Europe were also strong this week, with WPI90 up over €2,000/tonne.

Meanwhile, trade tensions between the US and Canada have escalated, with dairy featuring in the dispute.

After the US imposed tariffs of up to 50% on Canadian imports over the weekend, the Canadian government retaliated with tariffs of their own on American products entering the country. Cheese is one of those products most affected by tariffs.

For Ireland, the dispute could have mixed outcomes. Canada has a separate trade agreement in place with the EU, allowing access for European cheese. If US cheese becomes more expensive in Canada, this could create opportunities for Irish exporters.

However, if US exporters lose Canadian sales, more American dairy product could move on to international markets.

The increased supply could potentially slow the current momentum in global dairy prices and it will be interesting to see if there is an impact in upcoming GDT auctions.