The last Global Dairy Trade auction of 2017, saw overall prices fall 3.9% with all product prices down. 

Prices fell 3.9% at the final Global Dairy Trade auction of 2017.

Whole milk powder (WMP) prices were down 2.5% and skim milk powder (SMP) prices were down 4.8%.  WMP makes up roughly half of the product sold, while SMP accounts for about a quarter.

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Butter prices were down 2.3%, with an average price of US$4,474/t. The biggest fall in price was from the cheddar index, which was down 7.9% to an average price of US$3,389/t.

AHDB Dairy lead analyst Chris Gooderham said the results contained few surprises.

“We aren’t seeing a complete crash in dairy prices – rather the markets are just resetting.”

Mr Gooderham added that talk surrounding rising levels of EU milk production was largely a false message and failed to take into account the EU milk supply reduction scheme that came into effect 12 months ago.

“Butter prices haven’t dropped by that much considering where they have come from and cheddar prices were following their standard two- to three-month lag behind butter and SMP values.

“What is worrying is that powder is falling, considering it was low anyway.”

He added the situation could be compounded in the new year as the EU Commission votes on effectively removing the price floor for SMP sent into intervention.

However, he said prices could not fall much further before turning milk into powder was no longer worth the effort.

“Butter prices needed to come down from their record highs in August, but crucially demand is still there, so the key question is when will buyers come back to the market?”

The next auction is due to take place on Tuesday 2 January 2018.