Reducing supplies firm up the market; higher demand from third country buyers EU dairy markets are showing signs of taking off to much higher prices levels for the rest of the summer. Milk production has now just passed its seasonal peak and the prospect of reducing supplies is one factor creating the firm market. More importantly, however, is the rising level of prices on world markets at a time when Australian and New Zealand milk availability is very low and third country buyers turn to the EU for their growing needs. Although there were earlier fears that a foot and mouth cloud might hang over EU dairy exports this year, it now looks as if European exporters will have a bumper summer season. Butter prices across Europe have been rising steadily in recent weeks and are up in some countries by over 5% since the beginning of April. This has brought typical prices to a 12% premium over the intervention support price. Skim milk powder prices are also up by over 5% and the price graph is following the same line as last year when prices rose 25% between April and August. With skim prices up, demand for whey powder is beginning to rocket, particularly for animal feed use, and prices have soared by around 20% in the past eight weeks. Prices for whole milk powder are somewhat calmer and have seen increases of only about 2% since early April. Cheese markets also remain firm with prices only edging up slowly, but they are still typically 10% to 15% higher than a year ago. {{M/E CANNED GOODS }}

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