There were further indications of a positive turn in price sentiment in global dairy markets this week, as acute weather problems persist in Europe.

At this week’s GDT auction in New Zealand, average dairy commodity prices rose by 2.7%, with strong gains for skimmed milk powder (SMP), cheese and butter in particular.

Although less than 20,000t was sold at this week’s auction, the positive result from the benchmark dairy index reinforces the significant shift in dairy prices seen in Europe over the last fortnight, as buyers react to lower milk collections and tight stocks.

At this week’s GDT, the price of whole milk powder (WMP) increased by just 1% to a little over $3,300/t (€2,680/t). WMP is the most important product sold on the GDT, accounting for over 50% of product sales.

There was a strong bounce in SMP values at this week’s auction, with prices rising 4% to just over $1,900/t (€1,550/t). This puts New Zealand SMP at a premium of €230/t over European product. On the fats side, butter prices increased 3% at this week’s GDT to just over $5,650/t (€4,580/t), while the price of anhydrous milk fat increased over 5% to $6,120/t (€4,960/t). New Zealand cheddar prices increased almost 5% this week to $3,855/t (€3,120/t).

Closer to home, European spot prices for butter have increased a further €300/t in the last week to €5,600/t. Butter supplies remain extremely tight across Europe, with no stocks sitting in storage. SMP prices have also risen slightly to €1,320/t, while WMP is trading above €2,600/t.