Discover why milk, cheese, and butter prices are surging. How will global dairy trade gains and economic shifts impact your grocery bill? Read more to find out.
The dairy markets are currently in the midst of a significant rally, with prices of milk, cheese, and butter on a continuous upward trajectory. The recent Global Dairy Trade (GDT) event has played a crucial role in this, particularly with the notable increases in milk powders and cheese, which have further bolstered the gains in Class III and IV futures. Despite the spot cheese trade remaining unchanged, Class III futures are on the rise. Even after the seemingly bearish Cold Storage report from last month, butter prices are maintaining their upward trend, providing a clear indication that many Class III contracts are reaching new highs.
| Product | Price (per pound) | Price Change | Volume Traded |
|---|---|---|---|
| Nonfat Dry Milk (NDM) | $1.1900 | + $0.0225 | 17 loads |
| Butter | $3.1625 | + $0.0425 | 1 lot |
In a significant development, the Mexican peso is showing signs of weakening following the election of a new president. This is a key event to monitor, as it could potentially impact Mexico’s import activities. However, it’s important to note that this could also be a short-term news event.
At today’s Global Dairy Trade auction, milk powder prices climbed:
- SMP rose by 3.5% to $1.23 per pound
- WMP increased by 2.1% to $1.58 per pound
These gains were enough to keep the overall index in the green, with the weighted average price lifting 1.7% compared to the previous auction. However, volume was down 5.0% compared to the event before, with Southeast Asia & Oceania (33.0%) and North Asia (32.0%) emerging as the biggest buyers.
“Following GDT milk powder trends, the CME NDM market hovered around the $1.20-per-pound mark, settling at $1.1900, up $0.0225. Heavy trading was observed with 17 loads changing hands,” noted an industry insider.
The CME butter market also continued its climb, reaching a new 2024 high of $3.1625 per pound, gaining $0.0425 with one lot traded.
Increases in Nonfat Dry Milk (NDM) and butter contributed to higher Class IV futures. Contracts through the rest of 2024 went up by 50-72 cents. Notably, third-quarter futures jumped to $22.20 per hundredweight, an increase of 70 cents. Meanwhile, Q3 Class III settled at $20.95 per hundredweight, adding 29 cents.
Key Takeaways:
- Class III and IV futures are experiencing significant gains, with many contracts hitting new highs.
- The weakening of the Mexican peso following the election of a new president could potentially impact Mexico’s import activities.
- Milk powder prices increased, with SMP up 3.5% and WMP up 2.1%, maintaining a positive overall index.
- Volume saw a 5% decline compared to the previous event, with Southeast Asia & Oceania and North Asia being the largest buyers.
- The CME NDM market settled at $1.1900 per pound with heavy trading volume.
- Butter prices continued to rally, reaching a new 2024 high of $3.1625 per pound in the CME market.
- Class IV futures saw substantial increases, with Q3 futures jumping to $22.20 per hundredweight.
- Third quarter Class III futures settled at $20.95 per hundredweight.
