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Archive for butter price increase

Global Dairy Trade Auction Kicks Off 2025: Mixed Results and Price Shifts

Wednesday, January 8th, 2025

Check out the new Global Dairy Trade auction results. How will price changes in cheese, butter, and milk powder affect dairy farmers in 2025? Learn more.

Summary:

The first Global Dairy Trade (GDT) auction of 2025 was a mixed bag, with some dairy product prices increasing while others dropping. Mozzarella, butter, and buttermilk powder saw price increases, yet skim and whole milk powders, lactose, and anhydrous milk fat didn’t fare either. Even though the overall price index dropped by 1.4%, there was still strong interest, with 143 winners out of the bidders. According to Rabobank, the global dairy market remains relatively balanced, but issues like global politics and economic pressures are still at play. Dairy farmers need to monitor these factors and find ways to deal with the market’s ups and downs effectively.

Key Takeaways:

  • The first Global Dairy Trade auction of 2025 exhibited a 1.4% decline in the price index, following a previous decrease in December.
  • Increases were observed in mozzarella, butter, and buttermilk powder prices, while lactose, anhydrous milk fat, whole milk powder, and skim milk powder saw reductions.
  • Mozzarella had the most significant price increase at 3.6% per metric ton, reflecting a positive trend for certain dairy products.
  • Global market dynamics, including demand shifts in China and Southeast Asia, alongside potential geopolitical influences, continue to impact dairy trade.
  • Expert insights suggest a balanced global dairy market, with projections for demand improvements in 2025 amidst various external factors.
  • Dairy farmers are encouraged to effectively adapt strategies to navigate fluctuating market conditions, focusing on cost management and market exploration.
global dairy trade, mozzarella cheese prices, butter price increase, buttermilk powder value, dairy market trends, 2025 dairy auction results, supply and demand in dairy, economic factors in dairy, dairy industry challenges, dairy market opportunities

As 2025 kicks off and the first Global Dairy Trade auction unfolds, we see a blend of ups and downs that impact everyone—from dairy farmers to industry pros and even those simply enjoying their morning coffee. With the trade index dipping for the second time in a row, there’s uncertainty in the air. Notably, mozzarella cheese jumped by 3.6% to $4,173 per metric ton, perhaps thanks to its ever-popular use on pizzas. Meanwhile, butter rose 2.6% to $6,815 per metric ton, possibly making breakfast spreads a bit pricier, and buttermilk powder saw a modest gain of 0.9%, reflecting both growth and regression across different dairy products.

ProductPrice Change (%)Price (USD/metric ton)Price (USD/pound)
Mozzarella Cheese+3.6%$4,173$1.89
Butter+2.6%$6,815$3.09
Buttermilk Powder+0.9%$3,116$1.41
Anhydrous Milk Fat-1.6%$7,169$3.25
Whole Milk Powder-2.1%$3,804$1.72
Skim Milk Powder-2.2%$2,682$1.21
Lactose-2.4%$900$0.40

Global Dairy Trade Auction Sees Varied Results: A Mix of Highs and Lows in 2025 Kickoff

The latest Global Dairy Trade auction had mixed results, with the Global Dairy Trade Index falling by 1.4%. Despite this drop, some products saw a rise in value. Mozzarella cheese prices increased by 3.6%, butter increased by 2.6%, and buttermilk powder gained a tiny 0.9%. These increases bring some hope to stakeholders. 

However, not all products fared well. Lactose experienced the most significant drop, falling by 2.4%. Whole and skim milk powder also decreased, dropping 2.1% and 2.2%, respectively. Anhydrous milk fat also fell by 1.6%. 

This auction had 143 winning bidders, and 30,156 metric tons of dairy products were sold over 17 bidding rounds. These results highlight the ongoing changes in the global dairy market, reflecting both challenges and opportunities as the industry balances supply and demand.

Examining the First Global Dairy Trade Auction of 2025: A Dive into the Complexities of Global Dairy Pricing Dynamics 

The first Global Dairy Trade auction of 2025 showed mixed results, with some dairy products rising in price and others falling. Understanding these changes helps us understand what’s happening in the global dairy market. 

  • Mozzarella: Mozzarella prices jumped 3.6% thanks to growing demand in new markets and the popularity of mozzarella in foods like pizza and pasta. As restaurants open up worldwide, the demand for this cheese is climbing. 
  • Butter: Butter prices went up by 2.6%. This is because of increased demand during the winter baking season and decreased supply due to worker shortages in the dairy industry. Butter is often used as a fat substitute in food production. 
  • Cheddar Cheese: The sales of cheddar cheese increased slightly by 1%. Although it’s still prevalent in North America and Europe, it faces competition from other cheeses that are becoming trendy worldwide. 
  • Buttermilk Powder: With a 0.9% increase, buttermilk powder is in demand for baking and processed foods. It’s becoming a staple in convenience foods because it helps extend shelf life and improve texture. 
  • Anhydrous Milk Fat: The price of this product fell 1.6%. As more people opt for healthier oils,  increased production means more options are on the market. 
  • Whole milk powder: Prices dropped 2.1% due to more production than needed. Economic issues in some areas also mean people are buying less. 
  • Skim Milk Powder: The drop in price of skim milk powder was 2.2%, the same as that of whole milk powder. Too much supply and supply chain problems brought prices down. 
  •  Lactose: declined by 2.4% as low-lactose and lactose-free products gained popularity. People are choosing alternatives, which affects lactose stock and prices. 

These price shifts show the complex factors affecting global dairy markets. Changes in consumer preferences, production volumes, and economic conditions in different regions make the dairy trade a constantly adapting field.

Navigating the Ripple Effects: Embracing Opportunities Amidst Dairy Market Volatility

The recent ups and downs in Global Dairy Trade auction prices highlight the market’s unpredictability, which affects farmers worldwide. When prices fluctuate, they directly impact farmers’ incomes, especially since products like cheese, butter, and milk powder are vital to their earnings. Skim and whole milk powder have seen price drops, meaning potentially tighter margins for farmers. 

A drop in key product prices can squeeze profits, especially if production costs are close to these new prices. The unpredictability—wondering if prices will fall further or recover—makes it hard for farmers to plan. External factors like politics, trade issues, or weather also impact dairy production in some areas. 

But there are opportunities, too. Farmers can adjust their focus to capitalize on rising products like butter and mozzarella. Diversifying product lines can protect against these swings and tap into new demand. Improving production methods or adopting new tech can lower costs and boost competitiveness. 

Adjusting to these changes is crucial. Farmers might use hedging to lock in prices and avoid losses. Joining cooperatives can offer better market access and bargaining power. Staying informed about global trends helps farmers make smart decisions and run their operations more efficiently. 

Even though dairy farmers face challenges due to these price swings, there are strategies they can use to manage risks and find growth opportunities in this changing industry.

Weaving Through the Complexities: Unraveling the Tapestry of Global Dairy Market Dynamics

The latest Global Dairy Trade auction shows how market dynamics affect dairy prices worldwide. Demand from places like China and Southeast Asia plays a significant role in setting prices. Changes in China’s buying patterns can bump prices up or down, so everyone monitors their actions. 

Geopolitics also adds complexity. Trade tensions, tariffs, and policies between major dairy exporters and importers affect prices. Shifts in international relations can quickly change market dynamics, causing dairy sector stakeholders to reassess risks. 

Weather is another significant factor. Lousy weather in key producing regions can cut output or disrupt supply chains, impacting global dairy product positioning. Recent climate patterns have added pressure and uncertainty to pricing. 

Economic factors like inflation, currency shifts, and consumer spending power influence supply and demand. Global economies are recovering at different rates post-pandemic, with inflation affecting buying decisions. This economic scene shapes how consumers and producers engage in the dairy trade, understanding limits and opportunities. 

Anyone in the dairy trade must understand how global demand, geopolitics, weather conditions, and economic shifts interact. One must adapt to changes and plan for future trends to stay ahead in the dairy market.

Decoding Global Dairy Dynamics: Regional Influences on the 2025 Auction 

Looking at the auction results from a regional lens, each area brings a unique flavor to the global dairy scene. Economic and weather factors in each region impact their role in the worldwide dairy trade. 

  • Asia Pacific: This region, including major countries such as China and India, plays a significant role in the dairy market with increasing demand. Rising middle-class incomes drive this demand, but local production can’t always keep up, leading to more imports. This can push global prices up, though political issues sometimes shake things up. 
  • Europe: Europe keeps the dairy flag flying high with strong production from places like Germany, France, and the Netherlands. Their wide range of dairy goods remains popular at home and abroad. A strong euro can be tricky for exports, but top-notch quality keeps them in demand. 
  • North America: The U.S. and Canada’s dairy industries are marked by efficient systems and a solid home market. Recent price changes in lactose and milk powder have affected the destinations of these products. Trade deals also significantly influence the destinations of dairy products. 
  • Oceania: With New Zealand and Australia leading, Oceania is a big name in global exports. Its good farming practices and weather help it adapt to market changes. While milk powder prices are down, firm butter and cheese prices boost exports. 
  • Africa: There is a high demand for imported dairy products because local production doesn’t meet needs. Countries like South Africa are working to boost production. This growing demand makes Africa important on the import side. 
  • South America: South America, with countries like Brazil and Argentina, offers many opportunities. Although economic ups and downs can affect exports, there is still plenty of regional and global growth potential. 

These regional differences highlight their unique roles and impacts on the worldwide dairy trade. As they tackle challenges and seize opportunities, their interactions shape the ever-changing global dairy market.

A Complex Pathway: Unveiling the Challenges and Opportunities in the 2025 Dairy Market

The mixed results of the first Global Dairy Trade auction of 2025 have caught the attention of industry experts, prompting a closer look at trends and future challenges in the dairy market. Michael Harvey, a senior dairy analyst at RaboResearch, provides key insights into the current dynamics. Harvey observes that while global dairy fundamentals appear balanced in 2025, the situation is complex. He states, “More milk and dairy products are in the pipeline, and demand should also improve in 2025. However, geopolitics, disease, and weather could influence trade and production.” 

Harvey’s analysis highlights various factors affecting the market, suggesting its future is linked to economic conditions and external influences. He warns that consumer spending is still under pressure in many economies, which could create unpredictable demand patterns worldwide. He also emphasizes that geopolitical tensions and changing trade policies could affect market access and competitiveness among dairy-producing regions. 

Harvey notes the impact of environmental conditions, which can be a vital issue. He suggests that unexpected weather events could disrupt production, challenging the industry’s ability to meet international demand. This uncertainty underscores the critical need for producers and traders to enhance their resilience and strategic approaches. 

Overall, Harvey and other experts stress that the dairy sector must stay alert and adaptable. As the global dairy market deals with these complex dynamics, producers need creative strategies to seize opportunities and reduce risks. This outlook points to an interesting but challenging path for the dairy industry in 2025 and beyond.

Charting a Resilient Course: Practical Strategies for Navigating Market Volatility

For dairy farmers dealing with the ups and downs of today’s market, having innovative strategies is super important to keep profits steady and operations running smoothly. Here are some steps you can take to tackle the 2025 market: 

Optimize Production 

  • Use Smart Farming: Use tech and data to make smart choices about your farm and animals. This can boost how much you produce and make things run smoother.
  • Aim for Quality: Better milk can mean better prices and new markets. Think about tighter quality checks and using top-notch feed.
  • Keep Your Herd Healthy: Regular health checks and vaccination plans will lower vet bills and boost milk output.

Manage Costs 

  • Energy Smarts: Look into using solar or biogas. It’s good for the environment and cuts costs in the long run.
  • Resource Savvy: Reduce waste by using feed and water wisely. Have systems to manage and measure use correctly.
  • Bulk Buying: Partner with other farmers to buy supplies in bulk at lower prices, which helps reduce costs.

Explore New Markets 

  • Try New Products: Add products like cheese or yogurt to attract niche markets with more significant returns.
  • Sell Directly: Sell straight to customers at farmer’s markets or online for better profits.
  • Go Global: Look into exporting to markets where dairy demand is growing. Work with trade groups to enter new areas.

Implementing these strategies is crucial for dairy farmers to effectively navigate market changes and maintain the strength and profitability of their farms. Every problem is a chance to grow and change, and flexibility is key to success in the changing dairy world.  

The Bottom Line

As we kick off the first Global Dairy Trade auction of 2025, it’s evident that change and variability will keep shaping the dairy market. Understanding global trade’s ups and downs isn’t just for the books; it’s crucial for dairy farmers and stakeholders who want to steer through this sometimes rocky industry. The mixed results of the auction highlight the ever-changing dynamics of the market, underscoring the importance of remaining flexible and well-informed. It’s time to take proactive steps and dive into action to seize the opportunities presented by these changes. Enable yourself with the knowledge and strategies needed to succeed by exploring our resources, data, and expert insights online. Join our community of dairy pros and enthusiasts in discussions and forums where you can turn challenges into learning. Stay informed about upcoming auctions and developments by subscribing to our updates for the latest information. Engage with us, ask questions, and share your perspectives—we can build a strong future together. As we embark on the journey through 2025, Countless opportunities lie ahead, paving the way for an exciting journey forward. By staying collaborative and informed, we can face any challenges ahead with confidence and expertise.

Learn more:

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. 

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How Russia’s Inflation Crisis Pivots to Turkish Butter Amidst War Economy Woes

Sunday, November 3rd, 2024

Can Turkish butter soothe Russia’s economic woes as inflation reshapes dairy imports and spikes prices?

Summary:

As Russia grapples with economic pressures from its ongoing war and international sanctions, it faces a new challenge: sourcing butter. The recent decision to import Turkish butter underscores a larger struggle within Putin’s administration to balance military expenditures with consumer needs, known as “guns-and-butter” economics. With traditional suppliers like New Zealand retracting, Russia’s turn towards Turkish dairy farmers serves as a short-term fix while highlighting vulnerabilities in supply chains. Inflation has pushed butter prices up 26% since December, reshaping daily life as the Ruble’s purchasing power dwindles. This shift reveals the strain of maintaining affordable goods amid disrupted supply chains and resource reallocation toward military expenditure.

Key Takeaways:

  • Russia’s economy faces inflationary pressures, affecting staple commodities like butter.
  • Increasing butter prices prompt Russia to import Turkish butter despite political tensions.
  • One-quarter of Russia’s butter is sourced from international suppliers, and it is now facing logistical barriers.
  • The reallocation of dairy cream for cheese and ice cream production exacerbates the butter shortage.
  • Instances of butter theft reported in Russia due to escalating consumer costs.
  • Russia’s strategic pivot to Turkish butter supplies highlights the impact of geopolitical shifts on domestic markets.
Russia economy, military expenditures, breakfast spread, Turkey arms Ukraine, Russian pastries, inflation crisis, butter price increase, Ruble purchasing power, international sanctions, consumer goods affordability

In a world where bullets and butter seem worlds apart, Russia’s economic paradox starkly comes to life. Struggling to juggle the hefty weight of military expenditures with the simple pleasure of a breakfast spread, Russia finds itself in an improbable dance with Turkey—a nation sending arms to Ukraine on the one hand and enriching Russian pastries with its butter. This irony underlines a more profound crisis brewing within Russia’s economic cauldron, as soaring inflation and systemic disarray threaten basic consumer needs. Since December, the price of butter has skyrocketed by 26%, reshaping daily Russian life in unsettling ways. The urgency of this crisis is palpable, with consumer inflation showing no signs of relenting, distorting dairy markets and drawing an acute line between wartime ambition and the humble necessities of domestic markets. As the Ruble’s purchasing power dwindles, Russia’s pivot towards Turkish butter seems less a choice than an obligation in a market squeezed by international sanctions and internal mismanagement.

Butter or Bullets? The Fragile Balancing Act of Putin’s Economic Strategy

Russia’s economic strategy under Vladimir Putin has long revolved around the ‘guns-and-butter’ approach. This doctrine is rooted in a delicate balancing act: maintaining robust military capabilities while ensuring consumer goods are affordable for citizen welfare. It is a challenging dual mandate, especially in a nation with extensive geopolitical ambitions and diverse domestic requirements. 

However, this strategy is increasingly shaky as the global economic climate shifts. Western-led sanctions, imposed in response to geopolitical actions such as the annexation of Crimea and, more recently, the invasion of Ukraine, are exerting significant pressure on Russia’s economy. These sanctions hinder Russia’s access to international markets, restrict financial transactions, and curtail foreign investments, effectively narrowing the country’s economic leeway. 

Simultaneously, Russia grapples with surging inflation, a byproduct of international isolation and internal mismanagement. Consumer prices are spiraling upward, making it increasingly difficult for the average Russian to afford the essential goods that underpin their daily lives. This inflationary pressure is further exacerbated by disrupted supply chains and the reallocation of economic resources towards sustained military expenditure, straining the government’s ability to uphold its promise of accessible consumer goods. 

Putin’s ‘guns-and-butter’ strategy is thus facing its most severe test. The current economic environment challenges the Russian government to either recalibrate its approach or risk eroding public confidence in its capacity to deliver economic prosperity and national security. As inflation eats into consumer purchasing power and sanctions limit economic growth, the sustainability of this strategy remains in question, demanding innovative policy responses to navigate the storm.

The Delicate Dance: Balancing Defense and Domestic Needs in Russian Economics

Historically, Russia’s economic strategy has been heavily influenced by the ‘guns-and-butter’ model. This model strives to maintain an equilibrium between military expenditures and the production of consumer goods. This delicate balance is essential for ensuring the country’s security while also satisfying the needs of its civilian population. 

In theory, this model allows a nation to fortify its defense capabilities without compromising its citizens’ standard of living. However, executing such a strategy is inherently tricky, especially in conflict. During wartime, countries often find themselves forced to prioritize military spending over consumer welfare. As pressure mounts on the battlefront, governments may reallocate resources from consumer goods production to bolster their defense efforts, leading to a strain on the civilian economy. 

For Russia, this challenge is compounded by the ongoing conflict in Ukraine, which has necessitated a substantial increase in military spending. The resulting strain on consumer goods production manifests as inflation and scarcity of everyday items such as butter. This disrupts the economy and affects public morale, as citizens feel the pinch of rising prices and dwindling supplies. 

The difficulties in maintaining this balance reveal a fundamental tension within the guns-and-butter model: the simultaneous pursuit of military capability and consumer economic stability during an extended period of conflict. Such scenarios test the resilience of economies and require nimble strategies to mitigate the impacts on the populace, all while sustaining national defense objectives.

The Butter Burst: Inflation’s Squeeze on Russian Wallets

The inflation crisis in Russia has sent ripples through its economy, drastically affecting the prices of everyday commodities such as butter. This staple’s price, for instance, surged by 26% since December, a clear indicator of the broader inflationary trend hitting Russian households. According to the Russian state statistics service, this surge represents a significant rise in consumer price inflation, placing a heavy burden on the average Russian’s wallet. 

Every day, consumers are feeling the heat. Take the “Brest-Litovsk” high-grade butter in Moscow, for instance. Its price has gone up by 34% this year alone. This increase compounds Russian consumers’ struggles, already grappling with surging costs across various sectors. The implications of this are far-reaching. Shoppers like Sergei Popov, a typical Russian citizen, are finding their purchasing power increasingly strained as even the most basic grocery items like milk, cheese, and eggs become dearer. This personalization of the crisis helps the audience empathize with the average Russian’s plight. 

The economic ramifications extend beyond individual budgets, influencing broader market behaviors. Russian authorities recently convened with dairy producers to monitor butter production to curb this trend. However, the underlying issues—rerouted supply chains and an overheated economy—persist, driving butter and many commodity prices up, straining an already pressured market.

Turkish Delight: A New Dairy Savior for Russia’s Economic Woes

In this maelstrom of economic challenges, Turkish butter is emerging as an unexpected protagonist in Russia’s strained landscape. With the scarcity of traditional suppliers—New Zealand and Latin America retreating from the Russian market due to geopolitical sanctions—Turkey has stepped in, aiming to satiate Russia’s insatiable hunger for butter. Russia’s economic plight has transformed Turkey from a mere culinary neighbor to a critical ally, with its dairy industry ready to capitalize on the opportunity. 

The inaugural delivery of 20 tons of Turkish butter marks the beginning of a potential trend introduced to alleviate the skyrocketing prices unsettling Russian households. Turkey’s strategic geography and robust dairy network in provinces like Marmara and Aegean make it a prime candidate to replace former suppliers. While Russia grapples with overheating markets and consumer discontent, Turkey’s timely intervention could offer a balm, cushioning the blow of absent Western butter brands and ensuring that Russian tables—at least where dairy is concerned—do not stay barren for long. This emphasis on potential solutions can invoke a sense of hope in the audience.

The Ripple Effect: Russia’s Dairy Demand Revitalizes Turkish Industry 

The growing demand from Russia has certainly made waves in the Turkish dairy industry. Turkish dairy farmers and industry experts highlight a notable shift in operations and economic returns. Orhan Yildiz, a dairy farmer from the Marmara region, explains, “We’ve had to increase our production capacity by 20% to meet the new export demands. Initially, it was challenging, but the economic benefits are undeniable.” 

The intensified production, however, has come with its challenges. An industry expert, Ahmet Cetin, says, “Logistics have become crucial. We must ensure a consistent supply to Russia, which requires coordination across multiple channels. This push towards efficiency is something we’re embracing for long-term gain.” Data supports this, showing a 15% export boost within the first quarter of 2024. 

Economically, this relationship appears beneficial. The influx of Russian demand has not only provided Turkish dairy farmers with a significant income boost. Still, it has also strengthened the trade ties between the two nations, albeit amidst a complex geopolitical backdrop. As engagements deepen, industry stakeholders remain optimistic yet cautious, observing the developments closely.

From Cart to Crisis: Butter as a Luxury in Moscow’s Supermarkets

In Moscow’s supermarket aisles, ordinary citizens like Sergei Popov see the repercussions of Russia’s economic policies etched on their faces. For Sergei, a simple breakfast staple like butter has become a symbol of financial strain. “Every morning, starting the day with butter is a routine,” he laments, “but now, it seems like a luxury.” 

As the price of butter creeps steadily upward, households feel the squeeze. The cost has surged by 26% since December, leaving many to make difficult choices about their grocery lists. Sergei’s shopping habits have shifted—his cart is lighter, yet his wallet is equally so. “We buy the basics: milk, cheese, sausages. But where has the 1,500 rubles gone? It’s disappearing faster with each trip,” he says, frustration underlying his words. 

These rising prices are prompting changes in consumer behavior. Families reevaluate their purchases, prioritize necessities, and sometimes substitute margarine for the once-sacred butter on their tables. As another shopper shifts through the dairy section, she quietly notes, “Butter thefts have become a strange reality. The shoplifters are desperate, just like any of us.” 

This economic turmoil reaches beyond mere statistics, becoming a palpable hardship and altering everyday routines. As a result, once confident in their purchasing power, the Russian middle class navigates a new landscape of scarcity, further exacerbated by international tensions and sanctions. The rising costs aren’t just economic—they’re personal, reshaping lifestyles and expectations in unprecedented ways.

Butter Battle: Russia’s Strategic Manoeuvres to Tame a Spreading Crisis

Russian government officials have engaged in strategic discussions with local dairy producers in response to the escalating butter crisis. An agreement has been struck focused on stringent tracking of butter production to curtail skyrocketing prices. This collaborative effort aims to stabilize unstable market conditions. The critical strategy revolves around enhancing domestic production efficiency while simultaneously exploring international alternatives for imports, as evidenced by the recent surge in Turkish butter imports. Additionally, measures are being implemented to monitor retail practices closely to prevent profiteering and ensure consumer prices do not spiral further out of control. These steps represent a concerted effort by government and industry stakeholders to mitigate the impact of inflation on Russian households’ purchasing power, explicitly targeting the essential commodity of butter.

Geopolitical Churn: The Strategic Unraveling of Russia’s Butter Supply Chain

The ripple effects of Russia’s geopolitical decisions have created a complex web of challenges in its butter import landscape. The imposition of international sanctions since the 2022 invasion of Ukraine has dramatically reshaped Russia’s trading relationships, leaving formidable gaps in its supply chain. Traditional trade partners like New Zealand and Latin American countries have halted butter exports to Russia, illustrating a global stance against its actions through trade restrictions and logistical barriers. 

In response, Russia pivoted to alternative suppliers. Belarus, Iran, and India quickly seized the opportunity, recognizing the economic potential and the geopolitical significance of maintaining trade ties with a global power like Russia. These nations have become unexpected lifelines, navigating various logistical and payment obstacles imposed by the sanctions. 

Despite this, their role as critical suppliers is challenging. Maintaining steady butter supplies demands adjustments in production capacity and distribution networks, which still adapt to Russia’s specific needs. Additionally, these countries must balance trade benefits with Russia against potential diplomatic backlash from the broader international community. 

Turkey’s emergence as a new supplier showcases the dynamic shifts in global trade as nations recalibrate their economic strategies amidst fluctuating geopolitical landscapes. As these nations grapple with the challenges of fulfilling Russia’s butter needs, they also underscore the strategic interplay between politics and trade in today’s interconnected world.

The Bottom Line

As we survey Russia’s current predicament, the intricate dance between guns and butter reveals significant strains. Inflation soars, household budgets stretch thin, and reliance on imports, such as Turkish butter, highlights Russia’s economic fortification vulnerability. The ongoing shift in supply chains, exacerbated by geopolitical tensions, requires expansive strategic realignment from Russian officials seeking to stabilize domestic markets. 

This economic balancing act raises urgent questions: Can Russia sustain its war economy without further disrupting its citizens’ daily lives? And what repercussions will this turmoil hold for the global dairy market, now intertwined with Russia’s geopolitical strategies? As butter becomes emblematic of Russia’s broader economic challenges, the world watches to determine whether emerging markets will fill the void left by Western sanctions, reshaping trade routes and the fabric of global commodity supply.

Learn more:

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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. 

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Weekly Dairy Market Recap: Global Trends and Key Insights – Monday, 16 September 2024

Monday, September 16th, 2024

Stay ahead in the dairy market with our weekly recap. Check out key trends and stats from global markets. Ready to optimize your dairy strategy?

Summary:

Welcome to your one-stop source for global dairy market insights for the week of Monday, 16 September 2024. We’ve seen dynamic trading activity on EEX and SGX futures, notable gains in European quotations, and significant movements in cheese markets. The GDT Pulse Auction reflected modest gains, while GDT TE364 auction previews suggest stability. Danish dairy sectors are navigating production declines in national trends, and the USDA’s September WASDE report indicates tightening milk supplies ahead. Plus, US and Australian dairy exports are surging well above expectations, showcasing international solid demand. Stay tuned as we delve deeper into these trends, offering actionable insights and expert analysis.

Key Takeaways:

  • EEX futures saw a mixed performance with slight gains in butter but declines in SMP and whey.
  • SGX futures showed strength in WMP and SMP despite a minor dip in butter.
  • European quotations continued to rise, marking the sixth consecutive week of gains across all dairy products.
  • Cheese indices showed strong performance, with Cheddar and Gouda leading the increases.
  • GDT Pulse Auction reported modest gains, reflecting the dynamic nature of market activities.
  • GDT TE364 auction preview indicated stability in WMP and SMP volumes, showing no changes in total forecasted volumes.
  • The Danish dairy sector faced production declines but maintained quality metrics in milk composition.
  • USDA revised its September WASDE report, indicating a tightening milk supply due to lower cow inventory and slower milk production per cow.
  • US dairy exports surged 9.5% in July, driven by strong international demand.
  • Australian dairy exports outpaced expectations, with a significant increase of 23.0% from last year.
dairy market trends, dairy price volatility, European dairy exchange, butter price increase, skimmed milk powder trends, cheese market improvements, global dairy trade auction, US dairy exports, Australian dairy industry performance, dairy supply chain challenges

Have you ever wondered how the global dairy market volatility affects your bottom line? Staying current with these changes is crucial for dairy farmers and industry experts. Today is Monday, September 16, 2024, and in this weekly overview, we’ll look at the latest happenings in global dairy markets. Understanding market trends may help you make better manufacturing, marketing, and pricing choices. By staying on top of global dairy circumstances, you may better handle problems and exploit opportunities as they occur. In the volatile world of dairy, being proactive rather than reactive can make all the difference in your profitability and long-term sustainability. Your role in the industry is crucial, and strategic decision-making is more critical than ever.

MarketProductVolume Traded (Tonnes)Average PricePrice Change (%)
EEXButter1,320€7,687+0.3%
EEXSMP1,505€2,725-1.1%
SGXWMP11,795$3,458+0.6%
SGXSMP4,535$2,903+0.9%
EUButterVarious€7,950+0.3%
EUSMPVarious€2,588+2.2%
EUWheyVarious€812+1.5%
EUWMPVarious€4,268+2.5%

EEX Week in Review: Dynamic Trading and Mixed Market Signals

Last week, the European Energy Exchange (EEX) witnessed significant trading, with 2,825 tonnes of dairy goods changing hands. Wednesday emerged as the most considerable trade day, with activity peaking at 1,125 tons. This surge in trading volumes underscores the dynamic nature of the market, a factor that can directly influence your business decisions and strategies.

The performance of essential dairy products on the EEX was varied. Butter futures prices diverged among contracts, with the average cost of the Sep24-Apr25 strip rising 0.3% to €7,687. Skimmed Milk Powder (SMP) saw a negative trend, with the average price falling by 1.1% to €2,725 throughout the same time. Similarly, Whey fell 0.4%, ending the week with an average price of €959.

A variety of market conditions influences these price changes. The minor increase in butter prices might reflect strong demand or tighter supply. Still, the softening in SMP and whey prices could indicate plentiful supply or weak demand. Market players should pay particular attention to these patterns, which may indicate more significant alterations in dairy market dynamics.

SGX Futures Activity: Gauging Global Dairy Market Trends 

The SGX Futures activity is a crucial indicator for the global dairy industry, particularly for items such as whole milk powder (WMP), skim milk powder (SMP), anhydrous milk fat (AMF), and butter. Last week, the total volume traded on the Singapore Exchange was 16,930 tonnes, providing a comprehensive snapshot of the market’s health and potential trends. Here’s a closer look at the specifics: 

  • WMP: The standout performer on SGX, with 11,795 tonnes traded. WMP showed a slight firmness over the Sep 24-Apr25 curve, up 0.6% to an average price of $3,458.
  • SMP: Not far behind, with 4,535 tonnes traded. SMP displayed a stronger upward trend, up 0.9% over the Sep24-Apr25 contracts to settle at $2,903.
  • AMF: Traded volumes were smaller but still noteworthy, with a 0.7% rise over its Sep 24-Apr25 contracts, reaching an average price of $7,028.
  • Butter: Although a smaller volume of 600 tonnes traded, Butter was down by 0.3% over the same period, landing at an average price of $6,611.

We see some significant variances when comparing these patterns to those of the European Energy Exchange (EEX). EEX Butter futures had variable outcomes across contracts but ended with a modest gain (+0.3%) to an average price of €7,687. Meanwhile, EEX SMP fell 1.1% to €2,725. The Whey market fell 0.4% on the EEX, finishing at €959.

The SGX market demonstrated an overall increase trend for most dairy products, with a strong interest in WMP and SMP. In contrast, the EEX market had varied results, showing the nuances of the global dairy trade. These disparities illustrate the significance of regional and market-specific factors in determining price trends and trading volumes.

European Quotations on the Rise: A Detailed Analysis 

Let’s examine the current European quotes. This is the sixth week of solid momentum, with price hikes for all significant dairy products.

  • Butter
    The butter index increased by €27 (+0.3%) to €7,950, setting a new 5-year high. Dutch butter increased by €100 (1.3%) to €8,050. French butter likewise increased by €80 (+1.0%), reaching €7,850, while German butter fell by €100 (-1.2%) to €7,950. Over the previous seven weeks, the average butter price has risen by €1,285 and is currently up €3,547 (+80.6%) year on year. This substantial increase points to a robust demand rebound and a tight supply situation in the butter market.
  • SMP (Skim Milk Powder)
    Skim Milk Powder (SMP) had its sixth consecutive comeback, with the average price rising by €56 (+2.2%) to €2,588. The Dutch SMP increased by €40 (+1.6%) to €2,570, the German SMP followed suit at €2,625, and the French SMP increased by €90 (+3.6%) to €2,570. The average SMP price has increased yearly by €373(+16.8%). These improvements suggest a strong demand rebound and perhaps constraining supply in the SMP market.
  • Whey
    The whey index rose by €12 (1.5%), raising the average price to €812. Dutch whey climbed by €20 (2.3%) to €880, German whey by €10 (1.3%) to €785, and French whey by €5 (0.7%) to €770. Year on year, whey prices have risen by €174 (+27.3%). This higher trend reflects solid market fundamentals and increased demand for whey products.
  • WMP (Whole Milk Powder)
    The WMP index rose by €103 (2.5%) to €4,268. German WMP climbed by €140 (+3.3%) to €4,425, while the French index rose by €100 (+2.5%) to €4,030, and Dutch WMP gained by €70 (+1.6%) to €4,350. Year on year, the average WMP price has risen by €1,020 (+31.4%). This demonstrates a tighter worldwide market for whole milk powder, fueled by strong international demand.

The rise in these dairy product indicators indicates intense market circumstances defined by high demand and limited supply. This trend is encouraging for European dairy producers and processors but also suggests that downstream markets may face increased costs. Monitoring these pricing changes will be critical for industry stakeholders navigating this volatile market climate.

Cheese Markets Surge: Cheddar and Gouda Lead the Pack 

This week, European cheese indicators improved across the board. Cheddar Curd saw an outstanding gain of €116, or 2.5%, to €4,845. Over the last year, this index has risen by €1,144, or 30.9%. Mild Cheddar also performed well, increasing by €172, or 3.6%, to €4,893. This increases its annual gain to €1,117, representing an astounding 29.6% increase.

The Young Gouda index climbed by €78, or 1.7%, to €4,666. Young Gouda’s sales are up €1,213, or 35.1%, yearly. Similarly, the Mozzarella index rose €61, or 1.3%, to €4,653. This equates to an annual rise of €1,286, a staggering 38.2%.

What’s driving these tremendous gains? Several variables are in play. The European market has benefitted from consistent strong demand for native and imported cheese products. Strong export markets have increased prices, particularly in Asia and North America. Production expenses, including feed and labor, have increased, increasing prices. The combination of solid demand and higher production costs supports the rising trend of cheese indices.

GDT Pulse Auction: Modest Gains Reflect Market Dynamics 

The recent Global Dairy Trade (GDT) Pulse Auction PA060 witnessed moderate increases in essential items. The average winning price for Fonterra Regular C2 Whole Milk Powder (WMP) was $3,430, up $25 (+0.7%) from the previous GDT auction but $130 lower (-3.7%) than the prior pulse sale. Skim Milk Powder (SMP) achieved an average winning price of $2,800, up $70 (+2.6%) from the previous GDT auction and $120 (+4.9%) from the prior pulse event. A total of 2,209 tonnes were sold across all items, with 47 bids taking part, compared to the preceding pulse, which sold 1,972 tonnes with 51 bidders. The importance of these recent findings underscores SMP’s sustained good trajectory, with GDT and GDT pulse auctions increasing for the sixth time in a row. This trend may indicate a boost in market confidence and demand for SMP.

WMP, on the other hand, has increased somewhat, indicating a more conservative bounce, which might reflect a cautious buyer mood in the larger dairy market. The aggregate amount of items sold and the number of bids imply a constant market involvement. Still, the subtle price variations hint at divergent market dynamics for distinct dairy products. This information is critical for dairy professionals making sound judgments in a volatile market.

GDT TE364 Auction Preview: Stability in WMP and SMP Volumes Amid Market Dynamics 

Looking forward to the GDT TE364 auction, the amounts of essential items such as WMP, SMP, and cream are being closely monitored. Fonterra will offer 21,145 tonnes of WMP at this auction, matching the level of the last auction and corresponding with the most recent projection. WMP volumes will increase slightly to 22,232 tonnes for the two October auctions but will fall to 20,910 and 20,907 for the November events. This steadiness may limit any considerable price fluctuations in the near run. However, the November cut may put upward pressure on prices as Christmas demand picks up.

SMP quantities are consistent with the forecast, with no changes to TE364, keeping the market quiet and predictable. Cream group quantities are stable, with a high of 5,935 tonnes available and an annual projection of 99,895. The consistent supply of cream may avoid significant price increases, albeit this is strongly dependent on demand changes.

The overall picture indicates that the market will likely remain balanced shortly, barring any unforeseen swings in global demand or supply chain disruptions. With primary volumes staying consistent, we may not see significant price swings, creating a reasonably predictable market scenario for dairy professionals.

Danish Dairy Sector: Navigating Production Declines and Quality Metrics

According to the most recent estimates, Danish milk output in July 2024 was 493,000 tons, a 1.0% decrease from the previous year. While overall collections number 3.37 million tons, indicating a flat trend, the decrease in July is noteworthy. Milkfat content was 4.21%, with a protein level of 3.55%. This provides the month’s total milk. Solid collections fell to 38,000 tons, a 0.3% decrease from the previous year. Year-to-date, cumulative milk solid collections are 270,000 tons, a 0.2% decline from a year earlier.

Reducing milk output and solid collections might indicate a more significant problem for the Danish dairy industry. Lower production rates impact the supply chain, increasing costs for local and foreign customers. Furthermore, if these trends persist, dairy producers may need to apply efficiency measures or change herd management procedures to maintain output levels. The steady amounts of milk fat and protein signal that quality is stable, which is good news for dairy farmers concentrating on high-value products. One thing is sure: the Danish dairy business must actively watch these changes to strategically adapt to the changing production situation and prevent any market effects.

USDA’s September WASDE Report: Revised Forecasts Indicate Tightening Milk Supply Ahead

The USDA’s September WASDE report lowered its expectations for US milk output. Two thousand twenty-four projections are now at 102.5 million tonnes, down 0.2% from 2023. Production predictions for 2025 were also reduced to 103.4 million tonnes, indicating a 0.9% rise above 2024 levels. These reductions result from decreased expected cow inventory and a slow increase in milk output per cow. This slower rise in milk per cow is predicted to continue until 2025.

The revised production projection has increased cheese, butter, NDM, and whey prices, driven by recent price gains and the expectation of restricted milk supplies. Furthermore, export forecasts for fat and skim are rising owing to projected increases in dairy product exports.

US Dairy Exports Surge in July: Strong International Demand and Market Dynamics 

US dairy exports increased significantly in July, with milk equivalent exports up 9.5% over the previous year. This growth exceeds the +2.2% estimate, demonstrating worldwide solid demand for US dairy goods. Examining the various items, albeit somewhat lower than predicted, cheese exports increased by 10.1% over the previous year. However, the true standout was NFDM/SMP exports, which increased by 10.8% yearly, above expectations.

What do these numbers show? The higher-than-expected rise in exports indicates that US dairy products have a solid competitive position worldwide. Considering the present market circumstances, this development is exceptionally positive, indicating strong demand from overseas customers. The increase in NFDM/SMP exports suggests a growing dependence on these items, which might indicate a change in customer preferences or new market possibilities.

The consequences for the United States dairy business are enormous. For starters, continuous export growth may reduce local market constraints and boost milk prices, helping dairy producers throughout the country. Second, the success across product categories, such as cheese and NFDM/SMP, emphasizes the need for a diversified product range to suit changing global demands. Finally, these patterns encourage hope for the future, indicating that the US dairy sector can capitalize on its strengths in a developing international market.

Australian Dairy Exports Outpace Expectations: A Closer Look at Market Dynamics 

Australia’s dairy industry has had a strong export performance. Milk equivalent exports increased by 23.0% year on year in July, beating expectations of a -11.4% fall. This substantial export increase suggests possible changes in local demand and inventory levels.

Interestingly, although exports to China dropped by 61%, other top ten destinations showed a double-digit increase. This broad export landscape demonstrates strong demand from overseas markets despite a significant reduction in one of Australia’s top dairy customers.

Looking more closely, China’s mixed performance showed dropping data for WMP, SMP, and fluid milk but an unexpected increase in cheese, butter, and whey protein isolate imports. This slight fluctuation reflects changes in these groups’ consumption habits or stock modifications.

Domestically, flat to declining consumption rates indicate that dairy products are being reallocated to fulfill foreign demand, which may influence local market dynamics. If the current export pattern continues, domestic stockpiles may be further strained, necessitating prudent resource management.

The Bottom Line

Many vital insights emerge as we negotiate the ever-changing global dairy market scenario. The intense trading activity on the EEX and SGX reflects a lively market with minor price changes for dairy products. European quotations continue to rise, reaching new records and demonstrating solid demand. Furthermore, the cheese industry is expanding rapidly, especially for Cheddar and Gouda, which may indicate altering customer tastes. Meanwhile, the GDT Pulse Auction reveals a market battling with moderate increases and consistent volume.

The USDA’s updated predictions in the September WASDE Report indicate a tighter milk supply ahead, prompting us to oversee production and export patterns. The solid gain in US dairy exports and the unexpected spike in Australian dairy exports demonstrate the markets’ durability and flexibility. However, changeable domestic consumption patterns and complicated export dynamics, particularly with large importers like China, complicate the overall picture.

So, what does all of this imply for your business? These patterns provide valuable information that may help you make strategic choices about production planning, market positioning, and investment in new technologies. As the global dairy industry presents possibilities and difficulties, being aware and flexible will be critical for navigating this complicated environment.

How will you use market dynamics to improve your operations and remain ahead of the curve? Please share your ideas and tactics with us on the Bullvine community platform.

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CME Cash Dairy Market: Butter and Nonfat Dry Milk Prices Surge Higher, Cheese Prices Hold Steady

Tuesday, August 27th, 2024
cash dairy market, Chicago Mercantile Exchange, dry whey prices, cheese blocks, cheese barrels, butter price increase, nonfat dry milk, dairy market trends, Class IV futures, EU milk production, dairy farmers, dairy industry news

If you’ve been following the Chicago Mercantile Exchange, you may have noticed some exciting developments on Tuesday. The combination of constant and rising pricing presents a lot to analyze. Dive in with us and discover what it all means for you.

Dry whey is stable at $0.5650, with two sales confirming the figure. It symbolizes steadiness, which you could appreciate in these uncertain times. Meanwhile, cheese blocks and barrels remained steady at $2.14 and $2.25, respectively. There are no new transactions to announce here, but sometimes, no news is good.

And then there is butter. Butter prices have risen by $0.0225 to $3.1975, setting new yearly highs. That’s a significant increase, with thirteen sales from $3.1975 to $3.22. Nonfat dry milk (NDM) climbed by $0.0175, reaching $1.3150. Thirteen transactions were also registered, with values ranging from $1.3050 to $1.3175. These moves might indicate a strong trend that will continue for some time.

Daily CME Cash Dairy Product Prices ($/lb.)

FinalChange ¢/lb.TradesBidsOffers
Butter3.1975+2.251343
Cheddar Block2.1400NC000
Cheddar Barrel2.2500NC002
NDM Grade A1.3150+1.751337
Dry Whey0.5650NC244

Weekly CME Cash Dairy Product Prices ($/lb.)

MonTueCurrent Avg.Prior Week Avg.Weekly Volume
Butter3.1753.19753.18633.15916
Cheddar Block2.142.142.142.0827
Cheddar Barrel2.252.252.252.2251
NDM Grade A1.29751.3151.30631.27927
Dry Whey0.5650.5650.5650.5612

Weekly CME Cash Dairy Product Prices ($/lb.)

MonTueCurrent Avg.Prior Week Avg.Weekly Volume
Butter3.1753.19753.18633.15916
Cheddar Block2.142.142.142.0827
Cheddar Barrel2.252.252.252.2251
NDM Grade A1.29751.3151.30631.27927
Dry Whey0.5650.5650.5650.5612

CME Futures Settlement Prices

MonTue
Class III (SEP) $/CWT.22.5422.55
Class IV (SEP) $/CWT.22.2722.59
Cheese (SEP) $/LB.2.2052.194
Blocks (SEP)$/LB.2.142.14
Dry Whey (SEP) $/LB.0.540.54
NDM (SEP) $/LB.1.27751.3045
Butter (SEP) $/LB.3.19953.2175
Corn (SEP) $/BU.4.243.6725
Corn (DEC) $/BU.3.863.925
Soybeans (SEP) $/BU.9.60759.695
Soybeans (NOV) $/BU.9.819.8775
Soybean Meal (SEP) $/TON312.2317.3
Soybean Meal (DEC) $/TON308.1312.4
Live Cattle (OCT) $/CWT.176.98179.18

Trading commodities futures and options entails considerable risk. Investors must carefully balance these risks with their financial status. Although we obtained the material from credible sources, it has not been independently confirmed. This article represents the author’s viewpoint, not necessarily that of The Bullvine, and is meant as a solicitation. Remember that previous performance does not guarantee future outcomes.

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