According to DairyCo, milk production, for major exporters, continues to improve on 2012/13 allowing for stocks to replenish.

For January, US butter prices increased one per cent ($37/tonne) to $3,632/tonne. Butter supplies in the US remain tight as firm export demand is utilising supply that is not already committed. This is outweighing the pressure prices are under from a softening in domestic demand. EU prices decreased $269/tonne (five per cent), to $5,375/tonne, as a combination of high prices impacting exports and milk production prospects reduced domestic demand.

Oceania butter prices increased to $4,519/tonne from $4,350/tonne (four per cent) over the month. Most product is committed for quarter one as well as high export demand and reducing milk supply is combining to place upward pressure on prices.

US Skimmed Milk Powder (SMP) and Whole Milk Powder (WMP) increased in price by four per cent (to $4,483/tonne) and 2% (to 4,659/tonne) respectively. EU powder prices increased two per cent (SMP) and one per cent (WMP) over the month, to $4,581/tonne and $5,181/tonne respectively. Export interest has remained firm going into the New Year while production is slowly increasing.

Oceania SMP prices increased $175/tonne (four per cent) while WMP prices stayed relative stable with an increase of $6/tonne. Strong global demand and the seasonal decline of milk production added upward pressure to powder prices.  However, focus is largely on WMP which has been impacting SMP production.

US cheese prices have increased to $4,594/tonne, the highest price seen since August 2011. This 11 per cent increase over the month was a result of tight spot supplies and high export interest. Oceania prices remained at $4,900/tonne.