It was a stable week in dairy markets this week, with no major fluctuations on the European spot market.

The exception to that is cheddar, which dropped in price by €105/t on the spot market.

Butter increased by €25/t, skim milk powder (SMP) by €35/t and there was no change in whole milk powder (WMP) prices at €3,115/t.

The next Global Dairy Trade (GDT) auction is on Tuesday, so that will tell us more in terms of dairy demand.

The last auction increased in value by 2.7%, which ended a run of seven consecutive falls, led by the huge drops in demand for WMP.

This is because China isn’t buying WMP in anything like the quantities it has been. Chinese imports are back 51% between January and May 2023 compared with 2022.

Interestingly, sales of WMP from both New Zealand and the EU are up 5% compared with the same period last year, so other countries are taking this product, but at what price?

Preliminary data suggests that the rate of growth in milk supply in Europe is easing, but only slightly, at 0.8% up to the end of June and 0.7% up to the end of July.

In New Zealand, supply growth has fallen much sharper, with deliveries said to be back over 2.5% compared with this time last year.

Milk supply can be used as a proxy to how much pain farmers are in, either through milk price or weather. Favourable weather across Europe this year plus healthy bank balances from last year mean that milk supply isn’t falling as fast as it needs to.