Europe’s dairy market is finally starting to awaken from its summer holiday slumber. Over recent weeks, buying activity across European dairy markets has been almost non-existent, as traders and buyers headed for the sun.

However, there are now signs of life in the dairy market trade across Europe as the start of the new school year fast approaches. The autumn period is a critical one for European dairy markets and will set the tone for milk prices into the back end of 2019.

From an Irish perspective, we can expect to see UK customers resume their stockpiling of cheese, butter and dairy ingredient powders ahead of the latest Brexit deadline at the end of October. This should inject some much-needed demand into the dairy trade.

However, the level of stockpiling will not be to the same degree as it was last March, because cold stores are relatively full with meat and dairy stocks across the UK.

However, when viewed over the longer term, the current stockpiling in the UK is not good for Ireland’s dairy industry, as it has massively disrupted the traditional trade flows for Irish dairy co-ops.

Meanwhile, dairy prices were generally steady this week. Butter prices have stabilised above €3,300/t, while the price of skimmed milk powder (SMP) is also steady at €2,100/t.

On cheese markets, the price of cheddar has weakened slightly below €2,900/t as demand remains tepid.

The fresh weakness in sterling where it fell to £0.94 against the euro will have further eroded profit margins for Irish exporters shipping cheddar to the UK.