Since the end of the summer, EU and UK dairy product prices have gone into reverse after the dramatic increases seen in the first half of 2007. In the UK the drop has been particularly sharp for bulk butter, where typical prices in the run-up to Christmas of about £2,100 per tonne were 46% below their September peak. Skim milk powder quotations are also down by about 17%, while whole milk powder is up to 30% cheaper in price. All these prices, however, along with butter, are still showing significant premiums over the level of quotations in December 2006. The most exceptional price drop has been with whey powder, where the current prices are even lower than they were at the same time the previous year, after having peaked at a very high level in the spring. The reasons for this quick drop in prices are various. There has been a reaction among international buyers, who have held off buying once they could see that the market was coming off its peak levels. There have also been some reports that higher consumer prices have led to a reduction in consumption in some third countries and in mainland Europe, but there are no indications yet of any cuts in the UK. To a limited extent, the UK market has been protected from the effects of the lower prices elsewhere in the European Union because of the low value of the pound against the euro, which has prompted a drop of nearly 6% since late August 2007. Despite the recent price declines, the average price of bulk butter in the UK rose by 33% in 2007 compared with 2006. Similarly, the average price of mild Cheddar rose by 21%. Michael Bessey