It was a week of contrasts on the dairy scene this week, with European prices continuing their steady decline, while the Global Dairy Trade (GDT) saw a small recovery in prices compared with the last couple of auctions.

Sticking with the positive story first, the GDT increased this week by 1.1%, which is a very good result given over 24,000t of product was shifted at the auction.

The big increases were for whole milk powder (WMP), which increased by 1.7% and skim milk powder (SMP), which increased by 2.5%.

There was little change in the price of fats, with butter not changing at all, while anhydrous milk fat increased by 0.8%. Overall, while the change in price was low across the board, it is positive that prices went up rather than going down.

However, it was all price drops in Europe this week, with butter dropping by €55/t to €7,180/t, which follows on from steady price drops over the last couple of weeks, with butter now trading €200/t lower than it was one month ago.

Cheese also dropped in price this week, falling by €25/t, while WMP and SMP also saw price drops of €30/t and €20/t respectively. It wasn’t all good news at the GDT, as cheese prices dropped by 5.6%, with cheddar now trading for €3,925/t, which is a significant shortfall compared with the European price at €4,575/t.

Over the medium term, there is some uncertainty over what is going to happen to the US milk supply. Corn is likely to be cheap this year and next year, so that usually means more milk.