Retail prices for many dairy products are still moving upwards following the price boom this year, but the wholesale markets for commodities is clearly on the slide. In the case of butter, bulk quotations have eased back in recent weeks by 10%. That's in spite of a 25% rise in retail prices for blends in the past few days. Similarly, wholesale prices for SMP have fallen by nearly 20% since their peak in August, and whole milk powder levels are down 10%. The most significant fall has been in whey powder prices, which have slumped to levels not seen since late 2006 - down by more than 40% since the record highs of the early summer. However, cheese prices have not weakened and may strengthen a little further because stocks are lower than normal and the pipeline being matured is relatively empty. These falling wholesale prices are partly due to some easing of milk shortages, as production across the EU moves upwards in the usual seasonal pattern. The shortage encouraged many users to buy forward on a rising market from the spring, fearful that product supplies may be tight and deliveries could not be guaranteed. This created panic buying where price became a secondary consideration as long as availability was assured. Buyers have now seen some easing of prices and are holding off from making further forward purchases in the hope prices will fall. As for exports, recent levels have been very low, as high domestic prices have been uncompetitive on world markets, particularly with the declining value of the euro against the US dollar. EU export subsidies disappeared in the early summer when prices were escalating and it seems unlikely Brussels will want to reinstate these subsidies. Exports will, therefore, only recover when domestic price levels fall to the world market level. Michael Bessey