The clearance of the European Commission’s stockpiles of skimmed milk powder (SMP) sitting in intervention has allowed European dairy markets to normalise somewhat over recent months.
Butter prices have retreated from the record highs seen in 2017 and 2018 to just under €4,000/t this week on spot markets, which is still a very strong price in historical terms.
Similarly, European prices for fresh SMP are around €1,900/t this week. This realignment means that for the first time in a number of years, European dairy prices are once again competitive on world markets.
At this week’s GDT auction in New Zealand, the benchmark dairy index posted a near 2% gain in average dairy prices. This is the eighth consecutive positive result for the GDT.
This week’s GDT saw New Zealand butter prices jump more than 9% to hit €4,480/t, while SMP prices fell by 2% to just over €2,115/t.
In the US, spot butter prices are currently trading around €4,400/t, while SMP markets are priced at €1,915/t.
The normalisation of prices in European dairy markets is a positive for dairy farmers in this corner of the world.
European dairy exporters have taken a larger share of world export markets in recent years and the return to competitive prices will mean there is an important outlet for product.
With European dairy competitive once again on world markets, this should set a floor on dairy commodity prices as we enter a critical stage of the season in Europe.