The EU skimmed milk powder (SMP) price in April was only €330/tonne above the €1,698/tonne intervention level and a strong spring flush of milk could push prices down further still, according to DairyCo.
It says the most recent price for the week ending May 9 shows another small fall of 2% from the previous week, down to €1,930/tonne.
DairyCo says this is the latest in a series of small drops that are steadily chipping away at the price.
It says if intervention did come into play, traders may face a choice between selling to the EU Commission at a low price or trying to hold out for a possible price recovery.
DairyCo says this could be a difficult decision given the current level of uncertainty in the dairy markets.
DairyCo
Last month prices for SMP fell by 10.1% on average with Oceania markets contributing the most to this drop.
SMP prices in Oceania fell by 15.6% in April to $2,388/tonne, likely on the back of the increase in product availability. US SMP decreased 5.2% over the month to while EU prices fell by 8.1%.
DairyCo says buyer interest remains limited as most short term stock requirements are met.
A pick up in demand is not expected to occur until after the spring flush once buyers believe the bottom of the market has been reached, it says.