Global milk output remains robust, driven by the EU & US, offset by NZ weakness. A slowdown is noticeable in the EU due to adverse weather and a late spring.

Global demand is solid due to economic fundamentals such as a growing global economy (despite increasing rhetoric around trade) and a better oil price. Global supply is at +2% year on year. SMP prices remain at record lows despite well performing EU exports. Intervention management will be key for future developments. There are also significant stockpiles of SMP in the US and Canada.

The EU butter market has rallied as fat demand remains solid. Market direction in 2018 will depend on availability. In general, more milk is being diverted into cheese globally, creating an increasingly competitive export environment for cheese, but so far prices have not weakened. The Dollar exchange rate and CWT assistance is aiding US product on global markets.

The Ornua PPI in March is 100.4, reflecting lower returns from butter, SMP and spot markets.