Spiralling dairy product prices could be about to plateau. There are signs that prices have reached the top of the cycle and even, for some products, begun to ease. Skimmed milk powder, for example, has fallen back 4.5% in value from its peak last month of £2,750 per tonne. Whey powder is now significantly off its recent record high of £960/tonne. That said, there is no immediate prospect of serious price weakening for key commodities such as butter and cheese, according to Erhard Richarts of German markets agency ZMP. "For several years to come, the world market will find a new equilibrium with smaller production and demand growth rates and probably high price levels," he told the World Dairy Summit last week. Over the past year, butter and cheese prices have risen by 60% to 80% due to the booming world demand for milk and dairy products. Prices in the UK have been slow to react and are still rising. Although the worst increases are now thought to be over, analysts have warned that there could be modest further increases this autumn as the seasonal trough in milk production bites into the output of these products. Worldwide milk production is still reeling from a combination of drought, floods and rising feed prices, with slim 1.4% production growth forecast for 2007. Public stocks of butter, skim milk powder and cheese have been exhausted, and users have been concerned about the availability of supplies throughout the year. This imbalance between output and consumption has driven prices to record levels across all markets and isn't set to ease for some time. Michael Bessey