Dairy commodity prices have generally held steady over the last week in Europe, although powder markets remain weak. European spot prices for skimmed milk powder (SMP) remain on the floor at €1,300/t, while whole milk powder (WMP) prices have traded around €2,600/t.

Spot prices for butter traded slightly lower last week around the €4,500/t mark. On the EEX futures market in Europe, butter prices to the end of June 2018 rallied to close out the week at €4,900/t.

Cheese markets

Cheese markets remain quite healthy across Europe, with strong demand for important cheeses such as gouda and mozzarella boosting prices. Spot prices for gouda across Europe are strong at €2,700/t and expectations are that prices will rise further in the coming weeks.

Block mozzarella is also fetching €2,700/t on spot markets, with demand said to be rising ahead of the 2018 World Cup in Russia later this year. Pizza consumption rises in a World Cup year and dairy buyers are eager to secure mozzarella supplies ahead of the tournament in June.

Strong demand for gouda and mozzarella helps pull up the price of cheddar, which is the primary cheese manufactured in Ireland. Cheddar prices this week are trading above €3,000/t on European spot markets.

Flush of milk

On the production side, markets will be closely watching the spring flush of milk coming out of Europe. Milk prices in some big producing regions of Europe have been under downward pressure in January and February.

On top of this, feed wheat prices have risen to three-year highs in Europe following the recent rally on grain markets. This combination of lower farmgate milk prices in Europe and higher input costs should limit European milk production this spring.

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