According to DairyCo wholesale dairy commodity prices in the UK benefitted from a mini-surge in demand during February, pulling up all dairy commodity prices.
Buyers reacted to the improved GDT auction results and news of declining milk deliveries in key producing regions of the EU and returned to the market.
The drop in the value of the Euro further supported export demand, keeping availability limited and adding upward pressure to wholesale prices. However, demand has been reported to have eased off in the final week of February. Most short term cover has been secured and buyers are hesitant to enter in long term deals ahead of the spring flush.
Butter and cream prices both rose during February as demand outstripped availability. On average, butter prices rose by £275/tonne (12%) to average £2,500/tonne. Cream markets followed butter, rising 19% (£190/tonne) during February to an average of £1,170/tonne. The upturn was driven by high demand for EU product as availability from NZ and the US is restricted, either due to reduced production (NZ) or uncompetitive pricing (US).
Prices for SMP also increased in February in line with events on the GDT auctions. SMP prices averaged £1,700/tonne in February, up £275/tonne (19%). UK prices were dragged up in line with EU prices, boosted by rising export demand as the lower Euro improved the competitiveness of the product. Rising prices then brought domestic buyers back to the market looking to secure supplies. Similar to events in the fats markets, powder markets settled at the end of the month as there is an expectation that increased milk supplies in the spring will allow for lower prices.
Prices for mild Cheddar rose by 11% between January and February to average £2,450/tonne. The rising values of powders and fats have limited the quantities of excess milk going to curd cheese. This is having the knock-on effect of pulling up spot prices for mild Cheddars.