All eyes are on supply and demand, as traders watch for serious supply reductions. Some industry analysts suggest UK market sentiment has turned positive in the last few weeks and that there are some signs the market is recovering.

UK milk deliveries have crashed in the last few weeks. Traders who are selling dairy feel they have hit the bottom and are beginning to look towards selling 2017 product, but sellers are not that keen on doing business for then, given that prices are on the floor.

The latest figures indicate UK daily milk volumes collected are sliding and sliding fast. Figures now are about 4% to 5% lower than the same time last year, equivalent to a daily reduction of about 2m litres.

Some UK experts suggest peak milk will be well back – maybe up to 2m litres. EU spot dairy commodity prices have also been looking up week-on-week for the last three to four weeks – note all are from very low levels.

Most EU spot quotes for skimmed milk powder (SMP) remain somewhat below intervention equivalent. The increase has a long way to go to become a trend that will impact prices positively.

Powder intervention full

SMP intervention limits have been reached this week.

The Commission reported the cumulative volume purchased up to Monday 23 May was 216,791t.

New Zealand supply down

Fonterra confirmed that New Zealand 2015/16 season output is down 3.2% by end of April.

USDA reports that March 2016 output was 2% up on March 2015, with January to March production up 2.1%. Low input prices are helping.

Australia supply is well back. Australian milk production was down 4.6% in March.

The latest statistics from the EU Commission show the EU milk collection increased by 5.9% in March 2016 compared with March 2015.