Dairy Markets: European dairy prices creep higher thanks to steady demand

Despite all the uncertainty and operational challenges created by COVID-19, Europe’s dairy market remains in decent shape with prices starting to creep higher in recent weeks.

Last week, the Algerian state agency for dairy imports, ONIL, completed a tender process where it bought a significant 20,000t of skimmed milk powder (SMP) for prices around the €2,200/t mark.

With almost all of this product sourced in Europe, this sizeable dip into the market has helped support European SMP prices over the last fortnight. This week, spot prices for European-sourced SMP increased further to €2,120/t.

Spot prices for butter increased to €3,400/t this week

At the same, butter prices are also firming across Europe thanks to strong retail demand.

Spot prices for butter increased to €3,400/t this week, while German supermarkets have agreed a retail price of more than €3,600/t for butter sold in September.

On the cheese side, following months of no movement in either direction, European spot prices for cheese are also on the rise due to tighter than expected supplies.

Farmers can expect milk prices to remain steady or even rise higher

Spot prices for cheddar gained an extra €50/t this week to hit €3,150/t, while mozzarella prices also lifted slightly to €2,750/t.

When taken as a whole, the short-term outlook for farmgate milk prices here in Ireland is pretty healthy. Farmers can expect milk prices to remain steady or even rise higher as we move into the back end of the year.

However, looking any further ahead than this, winter is very difficult and trying to predict where dairy markets could go is anyone’s guess given the unprecedented times we find ourselves in.