Rising NDM prices are impacting dairy farmers. Are you ready for the market shift? Stay ahead in the dairy industry with these insights.
Summary: The price increase for nonfat dry milk (NDM) has significantly impacted dairy farmers, as prices slipped out of a limited band for the first time since January 2023. Milk powder production has been weak, with 1.2 billion pounds of NDM and skim milk powder produced in the U.S. between January and June, a 16.2% decrease from the previous year and the lowest output since 2013. However, cheesemakers’ demand has remained robust, leading to less milk available for drying. Manufacturers have had to tap into their inventories to satisfy business obligations, with NDM stockpiles at 273.184 million pounds at the end of June, down 6.2% from the previous year and the lowest midsummer volume since 2016. The surge in NDM prices indicates a change in the balance, with global market forces influencing pricing beyond U.S. borders.
- NDM prices broke their stable range for the first time since January 2023.
- Milk powder production fell by 16.2%, marking the lowest output since 2013.
- Cheesemakers’ high demand has led to less milk available for drying.
- NDM inventories dropped by 6.2%, the lowest midsummer stock since 2016.
- The recent price rise suggests a shift in the balance, potentially leading to further increases.
- Global market dynamics are playing a significant role in U.S. NDM pricing.
Have you noticed a recent increase in prices for nonfat dry milk (NDM)? If you are a dairy farmer, this adjustment may substantially impact your company. For 400 straight spot sessions, NDM prices stayed within a limited band. Prices slipped out of these limitations last week, the first time since January 2023. What does this mean to you? Let’s look at what’s driving these developments and what you need to know to remain ahead.
| Metric | Value |
|---|---|
| NDM Price Range (Previous 400 Sessions) | $1.0575/lb – $1.2650/lb |
| Recent NDM High Price | $1.2975/lb |
| NDM and SMP Production | 1.2 billion lbs |
| Production Decrease (Year-over-Year) | 16.2% |
| Manufacturer’s Stocks (End of June) | 273.184 million lbs |
| Stock Decrease (Year-over-Year) | 6.2% |
| U.S. NDM Exports (First Half of the Year) | 830 million lbs |
| Export Decrease (Year-over-Year) | 11.6% |
| Domestic Disappearance of Dry Skim Milk | 297.7 million lbs |
| Domestic Decrease (Year-over-Year) | 36% |
Tough Year for Milk Powder: Production Hits a Decade Low
Milk powder production has been weak this year. US producers produced 1.2 billion pounds of NDM and skim milk powder (SMP) from January to June. This is 16.2% lower than the previous year. It also had the lowest output during this time since 2013. Milk output has slowed this year, but cheesemakers’ demand has remained robust.
As a consequence, there has been less milk available for drying. Manufacturers have had to tap into their inventories to satisfy business obligations. At the end of June, NDM stockpiles were 273.184 million pounds, down 6.2% from the previous year and the lowest midsummer volume since 2016.
Simultaneously, supply and demand have struggled. U.S. NDM exports fell 11.6% in the first half of the year, while domestic usage of dry skim milk fell 36% compared to the same time the previous year. Despite this, last week’s surge in NDM prices indicates a change in the balance. As worldwide prices rise and inventories stay low, NDM prices may continue to grow in the following weeks and months.
It has been a challenging year for milk powder manufacturing. U.S. producers produced 1.2 billion pounds of NDM and skim milk powder (SMP) between January and June, a 16.2% decrease over the previous year. This collapse has had the lowest output since 2013. With milk production in decline and cheesemakers using the vast majority of the available supply, there is little milk left for dryers. Faced with a shortfall, producers must delve into their reserves to meet commercial obligations.
Inventory Insights: Digging into Stocks
Manufacturers have had to depend on their inventories to satisfy promises. At the end of June, NDM stockpiles were 273.184 million pounds, down 6.2% from the previous year and the lowest midsummer volume since 2016. What does this indicate for the future supply?
With stockpiles depleting, the picture isn’t so promising. Lower stockpiles might result in tighter supply and, therefore, higher costs. As these stockpiles deplete, an unanticipated rise in demand might drive NDM prices higher.
Are you ready for possible market shifts? Monitor your inventory levels and consider strategic planning to get through these unpredictable times.
Demand Dynamics Revealed
Demand dynamics are altering, and the data speaks loudly. U.S. NDM exports totaled 830 million pounds in the first half of the year, a significant 11.6% decrease from the previous year. Even more strikingly, household use has decreased substantially, with dry skim milk consumption down 36%. You may be asking how these developments impact costs. Worldwide solid price growth and declining inventory levels imply that NDM prices may climb in the following weeks and months. Tighter market conditions may result from limited supply and moderate demand increases. Now is the moment to pay special attention to these growing patterns.
Global Market Forces: Influencing NDM Prices Beyond U.S. Borders
Looking outside U.S. boundaries, global market developments have an equal role in setting NDM pricing. Countries that dominate the NDM and SMP markets include the European Union, New Zealand, and Australia. The EU, for example, is a significant producer and exporter of these goods. Due to weather or feed costs, international prices might rise when production levels fall.
New Zealand, famed for its extensive dairy exports, also plays an important role. Seasonal fluctuations impact their output, which affects world supply. China and Southeast Asia are significant users of milk powder. Any changes in their import needs, whether due to local production or consumer choices, might have a worldwide impact.
These overseas movements can potentially have a rippling effect on US markets. If large manufacturers experience difficulties, global supply may tighten, resulting in higher local costs. In contrast, a decline in demand from significant importers might reduce pricing pressures. Understanding global dynamics is critical for forecasting NDM pricing developments in the United States.
The Bottom Line
Until recently, lower supply and demand have effectively balanced each other out, keeping prices steady. However, last week’s tiny uptick indicates a change. With worldwide prices rising and short stocks, NDM prices may grow in the following weeks and months. The recent swings in NDM pricing may indicate a new trend. As a dairy farmer, you must be aware and adaptive. Keep an eye on market movements and be prepared to change your strategy. The future of NDM pricing is unpredictable, but taking preemptive steps will help you manage these changes effectively. Are you ready?
