It was another bad week for European spot market dairy prices, with all four key categories dropping in price.

Whole milk powder (WMP) fell by €65/t to €3,940/t, butter fell in price by €140/t to €5,295/t, skim milk powder (SMP) fell in price by €40/t €2,400/t while cheddar fell in price by €60/t to €4,050/t.

Meanwhile, at the Global Dairy Trade (GDT) pulse auctions, the prices for WMP and SMP continue to make small gains at this week’s auction.

There is no big GDT auction this week, so the pulse auction is all we have to go with.

Next week’s GDT will tell us more, but, on the face of it, it’s difficult to interpret dairy markets at present.

There is no doubt that the GDT is the one to watch, but seeing European prices slide each week for the last seven or so weeks is a worry.

Convergence

There is certainly some convergence on price going on, as European prices were a good bit higher than the GDT equivalent.

What it does tell us is that there is kick-back in the market to high prices, especially in Europe.

However, if the GDT continues to hold or rise, then it’ll be a fair indication that global markets are on track and the drop in European prices are because they were over-priced.

Meanwhile, there continues to be pressure on supply, with forecast supply expected to remain lower in Europe and New Zealand for the coming months. A dry summer in New Zealand will lower milk supply as feed gets scarce and farmers dry off cows early.