European butter prices fell sharply again this week, with spot values dropping by €115 per tonne to €3,835/t, the lowest level recorded since 2021. The modest post-Christmas recovery in the butter trade now appears to have been short-lived, as ample global supply continues to pressure the market.
In contrast, other dairy commodities showed more stability. Cheese and whole milk powder (WMP) prices edged slightly higher, while skim milk powder (SMP) posted a firmer gain of €70/t, lifting prices to €2,145/t. Although still relatively low in historic terms, the rise signals renewed buying interest in skim.
Export activity is supporting the SMP market, with European shipments reported to be running well ahead of last year’s pace. Buyers remain active when pricing is competitive, suggesting underlying demand for dairy proteins remains intact.
At the recent Gulfood trade fair in Dubai, industry representatives noted a generally positive tone around dairy proteins. However, many buyers appeared cautious, holding back from large commitments amid uncertainty over near-term price direction. Market sentiment for the second quarter of the year was described as more optimistic.
Meanwhile, high global milk output continues to weigh on overall dairy markets. New Zealand production data showed December collections up 2.45% year-on-year, reinforcing supply-side pressure. However, concerns are emerging about potential tightening later in the season, as dry El Niño conditions threaten pasture growth and could curb milk flows in the months ahead.
Overall, while protein demand remains a supportive factor, the balance of strong global supply and cautious buyer behaviour is keeping dairy markets under pressure for now.
