Buyer demand for dairy commodities eased in the past week as the holiday period in Europe gets under way. With lower volumes traded, European spot prices for butter have fallen back slightly in the last week to around the €6,000/t mark. Dutch spot prices for butter were flat over the last week at €6,140/t.

More worryingly, the price of skimmed milk powder (SMP) has weakened further and is now back at intervention levels. Buyer sentiment for SMP has been subdued over the last fortnight following the European Commission’s decision to sell 100t of SMP out of intervention for a price of €1,850/t.

The knock-on from this decision saw SMP prices take a sharp fall (-5%) to €1,835/t ($2,090/t) at last week’s GDT auction in New Zealand. Dutch spot prices for SMP have declined 3% this week below €1,800/t and European dairy futures markets are even more bearish on price for the months ahead.

It’s a contrasting story on the other side of the powder complex, with market sentiment for whole milk powder (WMP) improving over the last week.

WMP prices rallied 3% above the $3,100/t mark at last week’s GDT thanks to good demand from buyers in China and other south east Asian markets. In Europe, spot prices for WMP are steady at close to €3,000/t. In terms of supply, milk production in France continues to fall with milk collections for May falling 3% to 2.2m tonnes.