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© Tim Scrivener Dairy market figures have revealed the huge shift in milk-processing trends due to the effect of Covid-19 lockdown measures. Restrictions introduced at the end of March saw
food service sector demand for liquid milk collapse as cafes and restaurants were forced to close. A spike in retail milk sales, caused by consumers staying at home, failed to offset the
fall in catering demand. The liquid milk was instead diverted into making other products such as cheddar, powders and butter, to make use of the longer shelf life, said AHDB analyst Kat
Jack. Defra data revealed 505m litres of milk was processed as liquid milk. That figure was down 10% during April compared with March, and 5% down on the same month a year earlier. Milk into
cheddar was up 8% on March and 5% on April 2019. Reports indicate increased production mainly went into retail and stocks remain tight, as food service markets generally rely more on
imported cheddar than domestic, said Ms Jack. Meanwhile, milk processed into butter was up 14% on the month and 5% year-on-year. “For powder, we would expect some month-on-month shift in
milk use to go with the seasonal lift in production, but figures are in excess of the norm,” she said. See also: Dairy sector challenges hardship fund anomalies March and April saw a 57%
increase in milk converted to powder compared with an uplift of 21% over the same period in 2019. The net effect on overall monthly averages has been mixed, with butter, whole milk powder
(WMP) and average cheese prices still down month-on-month. EUROPE In Europe, wholesale dairy markets started to recover in late May as Covid-19 lockdown measures were eased and demand from
food service sector outlets picked up. The latest figures show prices stabilising and starting to rise in the second week of May following the sharp drops recorded in April. However, weekly
prices at the end of the month were still below levels at the start of April for nearly all products. BUTTER Packaged butter sales slowed in early May, and reports suggest a large amount of
butter was in cold storage, putting downward pressure on prices at the start of the month. The EU’s intervention with the provision of private storage aid (PSA) may have provided some
support to prices. Prices rose in the second half of the month as demand for bulk butter from the food service sector increased, but prices were still down month-on-month by 3.5% to
£2,597/t. POWDER The volume of skim milk powder (SMP) applications for storage aid was relatively small compared with butter and cheese. WMP markets were mainly focused on internal demand,
with light demand for exports, the AHDB reported. Both markets were relatively calm, and prices for SMP rose slightly by 0.7% to £1,777/t with WMP down by 1% to £2,365/t. CHEESE Demand
from the food manufacturing and food service sectors helped support the cheese market towards the end of the month. As of the week commencing 25 May, 40% of the total available PSA volumes
for cheese had been used. However, values were down 2.9% over the month to £3,160/t. GLOBAL Worldwide, the latest auction by Global Dairy Trade Events suggested stability, with just a 0.1%
increase in its overall index price across all ingredients. However, the overall figure masks more significant shifts over the product types. * Anhydrous milk fat down 2.9%, average price
US$3,960/t (£3,136/t) * Butter down 4.4%, average price US$3,631/t (£2,876/t) * Butter milk powder index up 9.4%, average price US$2,344/t (£1856/t) * Cheddar index down 5.3%, average price
US$3,520/t (£2,788/t) * Lactose down 4.1%, average price US$1,279/t (£1,013/t) * Skim milk powder index down 0.5%, average price US$2,530/t (£2,005/t) * WMP index up 2.1%, average price
US$2,761/t (£2,187/t)