There was significant upward movement in the dairy markets this week.

To say that demand for all products is soaring is an understatement, with near-vertical movements in butter, cheese, whole milk powder (WMP) and skim milk powder (SMP) on the European spot market.

Last week, we wrote that butter breached the milestone €6,000/t mark. Well, this week, it increased by almost €400/t and went to over €6,500/t. The futures market is predicting over €7,000/t is within sight and, at that price, we are almost back at peak 2022 levels.

As butter is a significant part of the basket of goods made by Irish dairies, it has a big impact on milk prices.

Co-ops went into the year with low stocks and as milk supplies have been lower than expected, they might not have much butter to sell at these prices. Equally, maybe they want to hold off expecting prices to go higher.

The other thing to keep in mind is that most of the co-ops forward sell a fair chunk of their output months in advance, so they may not have much unassigned product to sell.

At the same time, it needs to be recognised that prices rose sharply only to fall back again, so there’s no guarantees that the same won’t happen now.

However, there does seem to be more optimism this time that the market is going up. There was also a 0.2% decrease in milk supply in the US compared with April 2023.

WMP increased by €90/t, while SMP increased by €120/t in Europe, while there was further price gains for powders at the GDT pulse auction.