The last week has seen a big jump in European dairy markets. Buyer demand is strong right now ahead of the summer months, while milk supplies have been curtailed by the recent cold weather across Europe. The combined effect of lower supply and strong demand has sent dairy markets higher in the last week, particularly for dairy fats.

Butter prices took the biggest jump in the last week, rising over €300/t on spot markets with deals done as high as €5,200/t. A big reason for this jump is down to tight supplies due to a total absence of any butter stocks held in storage throughout Europe.

Securing supply

In a normal year, between 60,000t and 100,000t of butter could be sitting in storage at any one time. Right now, stores are empty and whatever butter is being produced freshly is selling immediately as buyers scramble to secure supply.

Pizza

Cheese prices have also jumped in the last week. Cheddar prices are steady at €3,200/t but mozzarella and gouda prices have jumped to €2,900/t and €2,700/t, respectively. Cheese demand in Europe is set to spike this year ahead of the upcoming World Cup set to take place in Russia next June. Pizza is a major World Cup food, which creates a jump in demand for pizza cheeses.

On the powders side, the price of whole milk powder (WMP) increased slightly in the last week close to €2,800/t. Even prices for skimmed milk powder (SMP) rose slightly last week on spot markets to €1,270/t.

Overall, dairy markets are reacting to reduced milk collections in Europe due to the cold weather. Buyer demand for dairy is described as very strong, which is reflected in prices on dairy futures markets out to June, July and August.

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