USDA shocks markets with bullish milk forecast as FMD outbreaks threaten European trade. Futures slump signals global dairy crossroads.
EXECUTIVE SUMMARY: The global dairy market faces pivotal shifts as SGX futures decline (-1.5% butter, -0.7% SMP) despite resilient EU physical prices (+29.9% butter YoY). USDA’s surprise 0.3% milk production hike for 2025 contrasts with Dutch output declines (-2.5% Feb), while Poland surges (+0.4%). FMD outbreaks in Slovakia/Hungary trigger border checks, risking $2B+ in EU trade disruptions. Upcoming GDT auction and China’s whey tariffs add volatility, with traders betting against fats as protein markets show unexpected resilience.
KEY TAKEAWAYS:
- US Herd Surprise: USDA revises 2025 milk forecast up 0.3% despite March cuts, signaling potential oversupply.
- Disease Dollar Risk: Sixth Slovakian FMD case threatens EU exports – 10 outbreaks since March disrupt $7B+ trade corridors.
- West vs East EU Split: Dutch milk solids drop -0.8% YTD as Poland climbs +1.6%, reshaping continental supply chains.
- Futures Fear: SGX contracts broadly decline (-1.4% WMP, -1.5% butter), reversing prior gains amid demand concerns.
- Auction Alert: April 15 GDT event tests global appetite after Pulse auction shows SMP resilience ($2,800) amid butter fatigue.
The global dairy market stands at a critical junction as futures contracts show concern for weakness while physical markets tell a more complex story. European Energy Exchange (EEX) and Singapore Exchange (SGX) futures trading revealed cautionary sentiment last week, with SGX registering broad-based declines that erased previous gains. Meanwhile, the USDA’s surprising April forecast revision signals potential supply pressure that could reshape Q2 margins. With Foot and Mouth Disease outbreaks in Central Europe adding another layer of complexity, producers face a market landscape that demands both vigilance and strategic positioning.
Futures Frenzy: Why Traders Are Betting Against Butter
The futures markets painted a revealing picture of trader psychology last week, with a stark divergence between fat and protein contracts that innovative producers should watch closely.
EEX Trading Signals
The European Energy Exchange trading reached 2,940 tonnes (588 lots), with Thursday emerging as the most active session at 965 tonnes. While butter futures slipped just 0.2% to €7,188 per tonne, the real story appeared in the options pit – 174 contracts abandoned like churned cream, signaling growing skepticism about Europe’s fat rally sustaining its 29.9% year-over-year premium.
In stark contrast, EEX Skim Milk Powder futures dipped 0.3% to €2,487 per tonne, yet open interest surged by 222 lots to 5,734 lots. This rush of new positioning despite price weakness suggests traders are placing strategic bets on protein’s future direction – possibly influenced by the strong GDT SMP result (+5.9%) from the previous week.
EEX Whey futures bucked the trend entirely, climbing 1.5% to €918 per tonne, partially recovering the previous week’s 1.2% decline. This resilience in the face of broader market caution suggests whey’s fundamentals may be diverging from the broader dairy complex.
| Contract | EEX Weekly Change | SGX Weekly Change | Key Price Driver |
| Butter | -0.2% | -1.5% | EU over-supply fears |
| SMP | -0.3% | -0.7% | GDT auction volatility |
| Whey | +1.5% | N/A | China tariff uncertainty |
This table exposes where traders are placing billion-euro bets as markets pivot.
SGX’s Global Warning Signs
The SGX platform witnessed substantially higher trading volumes at 18,421 lots/tonnes, with WMP dominating at 9,784 lots. The globally focused SGX contracts flashed warning signs across the board:
- WMP futures averaged $3,744 per tonne for April-November, dropping 1.4% and reversing the previous week’s 0.6% gain
- SMP futures declined 0.7% to $2,816 per tonne
- AMF eased 0.5% to $6,635 per tonne
- Butter futures took the hardest hit, falling 1.5% to $6,771 per tonne
This broad-based retreat across SGX contracts starkly contrasts gains seen the week prior, suggesting traders are recalibrating expectations in response to the USDA’s bearish supply outlook and ongoing trade tensions with China.
The Milk Map Redrawn: Poland’s Surprising Ascent Challenges Dutch Dominance
Polish farms outproduce Dutch rivals by 1.9% year-over-year – a margin wider than the EEX butter/SMP price gap. This eastward production shift could redefine EU dairy geopolitics in the coming quarters.
| Metric | Netherlands | Poland |
| Feb Collections | -2.5% | +0.4% |
| Milk Solids Yield | 4.69% Fat | 4.17% Fat |
| Regulatory Pressure | High | Low |
Poland’s 1.9% production lead over the Netherlands could reshape EU dairy power dynamics.
Dutch milk collections totaled 1.06 million tonnes in February, down 2.5% compared to February 2024, with year-to-date collections down 2.2% when adjusted for the leap day. Despite impressive component levels (4.69% fat, 3.64% protein), total milk solids for January-February reached just 184,000 tonnes, down 0.8% year-over-year.
Meanwhile, Polish milk production hit 1.06 million tonnes in February, up 0.4% year-over-year, with cumulative output for January-February up 1.1% on a leap-year adjusted basis. Component levels (4.17% fat, 3.47% protein) delivered 80,800 tonnes of milk solids in February, up 1.5% year-over-year.
These diverging national trends highlight the danger of viewing EU production through a single lens. Environmental regulations are reshaping the Dutch dairy landscape while Poland’s growth trajectory continues – a critical dynamic for anyone tracking European supply fundamentals.
CME Dairy Cash Markets: Cheese Surges While Whey Falters Under Chinese Pressure
The Chicago Mercantile Exchange spot markets showed surprising strength last week, with cheese prices defying the bearish sentiment in futures markets. Cheddar barrels gained 11¢ during the week, closing at $1.8050/lb on April 11, while blocks rose by 10.5¢, finishing at $1.7450/lb. Butter prices also showed resilience, closing at $2.3475/lb, up 5.25¢ for the week.
Nonfat dry milk increased slightly to $1.1675/lb, while dry whey declined by 2¢ to $0.4650/lb – a direct casualty of China’s retaliatory tariffs on U.S. whey products. This divergence between domestic cheese strength and international whey weakness highlights the complex crosscurrents facing U.S. dairy producers.
Border Checks & Billion Euro Bets: FMD’s Ripple Effect Threatens European Trade
The FMD situation in Central Europe took a concerning turn, with Slovakia confirming its sixth outbreak on April 8 (sample taken April 4). Combined with Hungary’s four confirmed cases, this brings the total FMD-affected locations in Europe since early March to ten.
| Date | Location | Herd Type | Containment Status |
| April 4 | Slovakia | Beef Cattle | Active |
| March 21 | Slovakia | Dairy | Contained |
| March 7 | Hungary | Mixed | Expanding |
Six outbreaks in 30 days – the numbers behind Europe’s border checks.
The Slovakian government’s declaration of a state of emergency and reintroduction of temporary border checks with Hungary and Austria signals the seriousness of the situation. While containment efforts remain focused on specific zones, the highly contagious nature of FMD creates significant risk beyond the immediate outbreak areas.
Will Slovakia’s 6th FMD case trigger EU-wide export bans? The economic stakes couldn’t be higher. Even localized outbreaks trigger complex control measures that impede logistics and raise costs. Third countries often implement broad import bans, creating trade friction that ripples the entire European dairy supply chain.
5 Auction Outcomes That Could Reshape Q2 Dairy Margins
The upcoming Global Dairy Trade auction (Trading Event 378) on April 15 will be a critical barometer for international demand signals. Fonterra has maintained its 12-month GDT event forecast quantities, with 7,369 tonnes of WMP, 2,235 tonnes of SMP, 2,180 tonnes of AMF, 1,005 tonnes of butter, and 310 tonnes of Cheddar on offer.
The interim GDT Pulse auction held on April 8 (PA076) provided mixed signals, with Fonterra Regular C2 WMP selling at $3,980 per tonne (below the TE377 Contract 2 price of $4,030) and SMP Medium Heat – NZ at $2,800 per tonne—a total of 45 participating bidders.
Forward-looking producers should watch for these potential auction outcomes:
- Further, WMP price erosion below $3,900 would signal a weakened Asian demand
- SMP maintaining its premium over $2,800 despite futures weakness would indicate protein resilience
- Butter continuing its slide from TE377’s 3.9% decline would confirm fat’s vulnerability
- Strong participation from Chinese buyers would challenge the trade tension narrative
- Widening spreads between near-term and forward contracts would signal market uncertainty
102.92 million Tonnes: USDA’s Bombshell Production Forecast Shocks Markets
The USDA’s April WASDE report delivered a seismic shift in the U.S. milk production outlook. The agency raised its 2025 forecast to 102.92 million tonnes (226.9 billion pounds), representing a 0.3% increase over 2024. That’s enough milk to fill 14,000 Olympic pools… with whole milk.
| Metric | March Forecast | April Forecast | Change |
| Milk Production | 102.6M t | 102.92M t | +0.3% |
| All-Milk Price | $21.50/cwt | $21.10/cwt | -1.9% |
| Herd Growth | 0.1% | 0.4% | +300% |
USDA’s startling herd growth revision – enough cows to fill 300 Super Bowls.
This upward revision was attributed to higher expected milk production per cow and a slightly larger average cow inventory than the previous forecast. The dramatic reversal from March’s downward revision sent ripples through the market, with the projected all-milk price for 2025 falling from $23.05/cwt in January’s outlook to just $21.10/cwt in April.
That USDA forecast revision isn’t just numbers – it’s a warning flare for global buyers banking on tight supplies.
The Bottom Line: Positioning Your Dairy Operation for Market Volatility
The week ending April 14 solidified a tone of caution across the global dairy landscape. Futures markets, particularly SGX, reflected increased bearishness. In contrast, European physical markets displayed mixed signals – still benefiting from strong year-on-year price support but showing short-term fatigue in fats and whey.
The USDA’s upward revision of its U.S. milk production forecast was the week’s most significant development, suggesting potentially greater supply pressure ahead than anticipated just one month prior. This contrasts with the mixed picture in the EU, where Dutch production is declining while Polish output increases.
Forward-looking producers should watch three metrics: 1) German whey inventories, 2) U.S. heifer retention rates, and 3) Chinese tariff timelines. Master these, and you’ll milk this volatility for profit while others still wonder what hit them.
The question isn’t whether the market will change—it’s whether your operation is positioned to adapt when it does. Are you prepared to understand the headlines and regulatory details determining which dairy businesses thrive in this new environment?
Learn more:
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