After weeks of declining prices, European dairy commodity prices finally found stability over the past fortnight, according to multi-national financial services firm INTL FCStone.

Price stability was reached two weeks ago, on April 22, and was followed by some support last week, on April 29.

Speaking to AgriLand, Dr. Peter Meehan, senior commodity analyst at INTL FCStone, explained:

"The European butter quotation gained 1.7% over the last two weeks climbing to €2,627 while the European skim milk powder (SMP) quotation increased by 2.0% since the middle of April, moving up to €1,920."

While the SMP index is now just 2.4% behind where it was this time last year, butter’s index remains 38% below where it was at the start of May 2019.

"This improved sentiment has also fed through into the European dairy futures markets with EEX butter and SMP gaining 0.9% and 1.2% respectively across their May 20 to January 21 contracts."

Mixed milk supply for March

From a milk supply perspective, production numbers for March have been somewhat mixed, the senior analyst explained.

In Europe, UK production remained under pressure compared with last year (-2.4%) while Irish (+2.1%); Dutch (+3.0%) and Polish (+1.9%) collections all saw strong numbers for the month, Dr. Meehan noted.

US milk production, meanwhile, continued its record-breaking run in March (+2.2%).

"In the southern hemisphere, New Zealand production was down on last year (-1.9%) but Australian collections continued their recovery (+7.0%) - though it should be noted both countries have now moved well into the back-end of their respective seasons, with supplies tailing off."


"Looking at the demand picture, European butter exports were very strong - up 62% - in February while exports of SMP (-19%); infant milk formula (IMF) (-5%) and cheese (-1%) were all down on last year.

"Chinese dairy imports on the other hand bounced back sharply in March compared to last year with whole milk powder (+7%); SMP (+21%); IMF (+7%); butter (+108%); anhydrous milk fat (+21%) and cheese (+54%) all seeing strong year on year gains.

New Zealand export data for March showed sharp year-on-year declines for most products.

New Zealand exports were exceptionally strong in the first three months of 2019, however, which is making the year-on-year decline appear exceptionally large for some products, Dr. Meehan added.

Continuing, he said:

"Despite the recovery in demand from Chinese in March, export statistics are showing global demand remains a little subdued.

"However, milk supplies in Germany and France, Europe’s two biggest milk producers, showed signs of slowing down somewhat in April - which should help re-balance the supply/demand picture as we progress through peak milk."