There’s more volatility in evidence in the dairy markets this week, with prices for butter and whole milk powder (WMP) surging on the European spot market.

Butter prices increased by €195/t to €5,885/t this week and are almost back to where they were before they mysteriously dropped in price.

The reason for the sudden increase in price now is still a mystery.

Powders also gained this week, probably strengthened by the strong performance at last week’s Global Dairy Trade (GDT) auction.

WMP increased by €150/t to hit €3,595/t, while skim milk powder (SMP) also increased, rising by €45/t to €2,325/t.

The prices also increased at the GDT pulse auction, as SMP increased by €74/t, while WMP increased by €145/t. These rises at the pulse auction are just bringing the prices back in line with what was achieved at the main GDT auction last week.

The markets can be summed up as follows: relatively stable for the winter months followed by sharp increases in February, sharp decreases in March and now rising again.

One school of thought is that buyers are holding off on buying long term and are instead doing deals for relatively prompt deliveries. This increases prices in the short term, but doesn’t do anything for medium-term demand, so there is increased volatility.

It seems that the bad weather is not confined to Ireland and that most of Europe is affected, resulting in a delayed planting of crops. As these are the main feed source for Europe’s cows, this could have an impact on milk supply later this year.