Weekly Global Dairy Market Recap—Monday, 24 February 2025

Global dairy markets navigate choppy waters as production rebounds clash with uneven demand. Butter defies trends, surging 2.2% at GDT, while SMP slumps. U.S. milk output inches up 0.1%, driven by Texas and Idaho gains. EU exports rise 1.0%, buoyed by strong Chinese demand. What’s next for dairy in 2025?

Summary

Global dairy markets remain complex as production rebounds clash with uneven demand. The GDT Price Index dipped 0.6%, with butter defying trends by rising 2.2%. U.S. milk production inched up 0.1% in January, driven by gains in Texas and Idaho, while the national herd expanded by 41,000 head year-over-year. EU27+UK milk equivalent exports rose 1.0% in December, buoyed by strong Chinese demand. New Zealand’s January collections surged 2.6% year-over-year, with milksolids up 5.0%. Despite oversupply concerns in some regions, butter markets showed resilience, with CME spot prices climbing 3.75¢ to $2.415/lb. However, NDM prices fell 4¢ to $1.24/lb amid weak demand. As the sector navigates these challenges, producers and processors must balance efficiency gains with evolving consumer demands and regulatory requirements.

Key Takeaways

• Global dairy production shows mixed signals: New Zealand and Argentina surge, while EU and US growth remains tepid.
• GDT Price Index dipped 0.6%, with butter defying trends by rising 2.2%.
• US milk production inched up 0.1% in January, with the national herd expanding by 41,000 head year-over-year.
• Regional disparities persist in US production, with California struggling (-5.7%) while Texas and Idaho surge (+6.5% and +6.4% respectively).
• EU27+UK milk equivalent exports rose 1.0% in December, buoyed by strong Chinese demand (+21% year-over-year).
• Butter markets show resilience, with CME spot prices climbing 3.75¢ to $2.415/lb despite oversupply concerns in some regions.
• NDM prices fell 4¢ to $1.24/lb amid weak demand, now holding a price advantage over European and New Zealand products.
• Feed costs are edging upward but remain modest, with May25 corn futures at $5.1275/bu (+4¢) and soybeans at $10.63/bu (+10¢).
• Component levels in US milk continue to increase, contributing to plentiful fat availability and historically low cream multiples.
• New cheese processing capacity in the US could help absorb excess butterfat in the coming months.

The global dairy landscape continues to evolve, with production rebounds in key regions offsetting stagnation elsewhere. Market dynamics reveal a complex interplay of supply growth, shifting demand patterns, and ongoing price volatility across significant commodities.

Production Trends

Southern Hemisphere Surge

New Zealand’s January collections jumped 2.6% year-over-year to 2.39 million tonnes, with milk solids up an impressive 5.0%. Fonterra has revised its 2024/25 forecast upward to 1,510 million kgMS, representing a 2.7% increase from the previous season. Argentina’s output also impressed, rising 5.6% to 907,000 tonnes in January.

Mixed Signals in the North

U.S. milk production showed signs of recovery, inching up 0.1% to 19.1 billion pounds in January. The national herd expanded by 41,000 head year-over-year, reaching 9.365 million cows. However, regional disparities persisted, with California struggling (5.7%) while Texas and Idaho surged (+6.5% and +6.4%, respectively).

European collections remained tepid, with December output across the EU27+UK up just 1.0% year-over-year. Annual growth for 2024 settled at a modest 0.7%.

Market Dynamics

Futures and Spot Markets

EEX butter futures edged up 0.3% to €6,992 for the Feb25-Sep25 strip, while SMP dipped 0.2% to €2,643. SGX saw more pronounced movements, with WMP down 2.8% to $3,844 and butter up 3.8% to $6,832.

The CME spot butter market clawed back 3.75¢ to settle at $2.415/lb, bucking broader bearish trends . NDM fell 4¢ to $1.24/lb, while cheese markets remained unsettled, with blocks losing 2¢ to close at $1.90/lb.

Global Dairy Trade

The GDT Price Index slipped 0.6% at Event 374, with notable declines in SMP (-2.5%) and cheddar (-3.4%). Butter remained a bright spot, gaining 2.2% to reach $7,390.

Trade Flows and Policy

EU27+UK milk equivalent exports rose 1.0% in December, with strong shipment growth to China (+21% year-over-year). New Zealand’s January exports showed strength across multiple categories, including WMP (+8.1%), IMF (+24.9%), and cheese (+32.9%).

Recent trade tensions have emerged, with rivals accusing Canada of dumping dairy products. This highlights the complex interplay between domestic supply management systems and international trade obligations.

Consumer Trends and Outlook

Plant-based alternatives continue to gain traction. In 2022, plant-based milk sales in Denmark increased 17%, while dairy milk sales fell 10%. This shift reflects growing consumer interest in sustainability and health-conscious options.

Feed markets show upward pressure, with May 25 corn futures settling at $5.1275/bu (+4¢) and soybeans at $10.63/bu (+10¢). These input cost increases could squeeze producer margins in the coming months.

Innovation and adaptability will be key as the sector navigates these challenges. Producers and processors must balance efficiency gains with sustainability initiatives to meet evolving consumer demands and regulatory requirements.

Learn more

• Global Dairy Market January 24th 2025: Navigating Challenges and Emerging Opportunities
• USDA Predicts Tight Milk Supply and Strong Demand for 2025
• Global Dairy Market Dynamics: Navigating Volatility and Strategic Opportunities in 2025

Join the Revolution!

Bullvine Daily is your essential e-zine for staying ahead in the dairy industry. With over 30,000 subscribers, we bring you the week’s top news, helping you manage tasks efficiently. Stay informed about milk production, tech adoption, and more, so you can concentrate on your dairy operations.