For the first time in months, all four key commodities recorded a price drop in the European spot market.

Butter took the biggest hit, falling by €175/t to hit €5,445/t. This was followed by whole milk powder (WMP) which fell by €70/t to €3,695/t.

Meanwhile, skim milk powder (SMP) fell by €30/t to €2,580/t and cheddar fell by €10/t to €4,210/t. Prices have been rising steadily for the last six to eight weeks, so some stalling was expected, particularly as we get closer to Christmas.

The fundaments are still strong though, as supply across Europe continues to fall by between 2% and 6% compared with last year.

New Zealand milk production for October is down 0.3% on last year and US milk production is down 0.5%, the fourth consecutive month of a reduction in supply. Of course, supply in Ireland is well back for both October and November by well over 10%.

There are also increasing indications that China is buying more product.

Milk powder exports from New Zealand were up 15% in October compared with the same period last year, so the expectation is that most of this product is going to China, although the Kiwis are also sending more product now to other markets, albeit at a price.

The Global Dairy Trade pulse auctions for this week recorded decent rises for both WMP and SMP, with 4.3% and 2.9% rises.

Closer to home, early price setter Lakeland was first out of the blocks with a price rise and, after another lift to the PPI, the expectation is that more will follow.