European dairy commodity markets recorded limited price movements this week, although the gradual upward momentum across several products continues. Butter prices have started to recover after months of decline, skimmed milk powder (SMP) remains supported by strong demand, and tightening milk supplies are contributing to higher spot milk prices.
According to the latest market update reported by Farmers Journal, cheddar prices remained unchanged, while whole milk powder (WMP) recorded a marginal decline. Meanwhile, developments in the United States dairy and beef sectors are creating additional uncertainty for international dairy markets, particularly for Irish exporters.
The current market environment reflects a combination of product-specific demand, seasonal changes in milk production and the economics of dairy farming in major exporting regions.
European Dairy Commodity Prices Remain Mixed
European dairy commodity prices showed relatively small movements during the reporting period, with differences emerging between butter, cheese and milk powders.
| Dairy commodity | Reported price | Weekly movement |
|---|---|---|
| Cheddar | €3,800/tonne | Unchanged |
| Whole milk powder | Not specified | Down €25/tonne |
| Butter | Approximately €3,700/tonne | Up €50/tonne |
| Skimmed milk powder | Not specified | Gradually increasing |
Cheddar prices remained stable at €3,800 per tonne, indicating limited immediate movement in the European cheese market. Whole milk powder declined by €25 per tonne, a relatively small adjustment compared with the broader trends observed across dairy commodities.
Butter, however, increased by €50 per tonne to approximately €3,700 per tonne. The movement suggests that the prolonged decline in butter prices may be stabilising, although sustained recovery will depend on demand, production volumes and available stocks.
Skimmed milk powder continues to demonstrate positive price momentum. Strong demand is supporting prices as they move closer to previous highs, although the latest report does not provide an exact SMP price.
These differences highlight why dairy manufacturers and processors must monitor individual commodity markets rather than rely on a single indicator of overall dairy market performance.
Tightening European Milk Supplies Support Spot Prices
Milk availability across Europe is beginning to tighten as seasonal changes affect cow yields. Even in countries where calving takes place throughout the year, producers are reporting reduced milk availability.
This tightening is becoming visible in the spot milk market, where prices are rising again. The reported average offer for spot milk has reached approximately €0.47 per litre.
Spot milk prices reflect the cost of milk traded outside longer-term supply arrangements and can respond quickly to changes in immediate availability. When milk volumes decline while processors continue to require raw material, spot prices can increase.
For dairy processors, higher spot prices can raise the cost of securing additional milk for cheese, butter and milk powder production. The effect on profitability will depend on whether finished-product prices rise sufficiently to offset higher raw milk procurement costs.
The tightening supply environment could also support dairy commodity prices if reduced milk availability limits production over the coming weeks. However, the extent of this effect will depend on demand conditions and developments in other major milk-producing regions.
US Milk Production Growth Creates Additional Market Pressure
The United States recorded approximately 2% growth in milk supplies for September, according to the report. This increase could create additional competition for European dairy exporters, including Irish producers, if greater US output translates into increased availability of dairy products on international markets.
However, the economics behind US production growth are particularly important. High calf prices and strong values for culled cows are providing dairy farms with significant additional income.
Sales of calves and cull cows reportedly account for nearly one-fifth of total farm revenue and contribute almost all of the profit margin on some farms, while milk revenue alone is struggling to cover input costs.
This means that growth in US milk production cannot be understood solely through milk prices and feed costs. Revenue from livestock sales is also influencing farm-level decisions and overall financial performance.
If livestock prices remain strong, dairy farmers may have greater financial incentives to maintain or expand production. Conversely, a significant decline in beef prices could weaken this additional income stream and affect the economics supporting current milk supply growth.
Beef Market Conditions Influence Dairy Farm Economics
The US beef market is experiencing historically tight cattle inventories, helping support elevated beef prices. These conditions are creating an important economic link between the beef and dairy sectors.
Dairy farms can generate revenue from calves and animals removed from their milking herds. When beef prices rise, the value of these animals can improve overall farm returns, helping offset pressure from milk production costs.
This relationship also illustrates the interconnected nature of livestock markets. Changes in cattle availability and beef demand can influence the profitability of dairy farms, even when milk commodity prices remain relatively weak.
For international dairy markets, the key question is whether US milk production growth can continue if livestock prices weaken. A reduction in revenue from calves and cull cows could put pressure on farm margins and potentially slow milk supply expansion.
Outlook for European and Irish Dairy Markets
The latest developments point to a dairy market shaped by contrasting supply and demand conditions. European milk supplies are tightening, spot milk prices are rising, and skimmed milk powder demand remains strong. Butter has also shown signs of stabilisation, while cheddar prices are unchanged and whole milk powder has edged lower.
At the same time, US milk supply growth could increase competitive pressure on international markets, with livestock revenue providing an important source of support for American dairy farm profitability.
For Irish dairy farmers, processors and exporters, the coming period will depend on the balance between European milk availability, commodity demand and competition from other major exporting regions.
Dairy businesses should continue monitoring butter, cheese and milk powder prices alongside spot milk costs, US production trends and beef market conditions. These indicators will help determine whether the current gradual recovery develops into a broader strengthening of dairy commodity markets.
