Discover recent changes in global dairy. How will they affect your strategy? Read our expert analysis for insights and trends.

Summary:

The global dairy market navigates a complex and volatile landscape, marked by notable shifts in EEX and SGX futures impacting butter, SMP, AMF, and WMP pricing. European markets experience cheese indices and quotations downturns, influencing international trade dynamics. Meanwhile, Fonterra adjusts its forecasts amid these challenges, while U.S. Class III and IV futures show resilience, driven by strong whey protein demand yet shadowed by future surplus concerns. Amidst the volatility, the interplay of demand, supply, and international trade relationships shapes the dairy industry’s narrative. China’s renewed interest in milk powder injects optimism into the market while fluctuating European cheese prices underscore the ongoing challenges for producers and retailers. As uncertainties loom, stakeholders must remain vigilant and adaptive to navigate the churning currents of the global dairy market.

Key Takeaways:

• The global dairy market faces downward trends across various regions and products.
• EEX and SGX futures markets experienced decreases in butter, SMP, AMF, and WMP prices.
• European dairy products, including cheese, are experiencing a fourth consecutive week of price declines.
• US dairy markets show fluctuations with Class III futures rebounding, while Class IV contracts experience setbacks.
• Fonterra has raised its milk price forecast due to increased demand from China and Southeast Asia.
• Recent milk collection data from Ireland and France show year-on-year increases, while Denmark experiences a slight decline.
• The US whey market shows strong demand, contributing to a rise in Class III futures.
• Economic factors, such as corn and soybean price adjustments, influence dairy production costs and market behaviors.

In the dynamic realm of dairy, comprehending the intricate dance of market forces is crucial. The current environment is a testament to the industry’s resilience, with unexpected changes, rapid rises, and innovative strategies showcasing its strength and adaptability. As we explore the shifts impacting global prices and production this week, we witness how these changes influence financial statements, farmers’ lives, and related businesses’ operations. With prices and demand constantly in flux, dairy farmers and industry professionals need to stay informed and plan using data. This article provides a detailed overview of recent developments, focusing on international trade and regional production, to illuminate the future for those in the dairy industry.

Riding the Wave: Navigating the Turbulent Milk Seas

The global dairy market is experiencing many changes and challenges. Supply chain issues are a significant concern, as transport problems have made delivering dairy products on time across countries challenging. This has led to unsteady supply levels, often causing price hikes and shortages in some places. 

At the same time, what consumers want is changing. Some markets show a growing interest in plant-based alternatives, while traditional dairy products are still prevalent in others. This is due to changing eating habits and increasing health awareness among consumers. Also, the push for sustainability encourages producers to adopt more environmentally friendly practices, which affects the types of products offered and market trends. 

On the international trade side, geopolitical issues and trade agreements affect the flow of exports and imports. The trade relationships, especially with key dairy-producing countries like New Zealand, are meaningful because they impact global pricing and supply. Recently, China’s renewed interest in buying milk powder has boosted exporters, creating optimism towards the end of the year. 

In summary, the global dairy market is in flux, and industry players are adapting to current challenges and preparing for long-term success. Despite the volatility, opportunities are on the horizon, and those who can navigate the changes effectively stand to gain.

The Tide Turns: Analyzing EEX Futures in a Volatile Market 

The recent EEX futures trading activity, with 3,555 tonnes traded, reflects a dynamic yet challenging environment for dairy commodities. The split between butter, SMP, and whey futures trading offers critical insights into market trends and potential shifts. 

Butter futures saw a marginal decline, with the average Dec 24-Jul 25 strip price slightly decreasing. This subtle drop points to a broader market sentiment that’s cautious about butter demand, probably due to already high annual price increases, as seen in the European Quotations. This could signal overstocked supplies or a temporary lull in consumer demand, suggesting that stakeholders might consider strategic restocks or price adjustments to counter potential downturns. 

SMP futures, which experienced a 1.7% decrease in average price, resonate with a global trend towards more affordable dairy inputs. The SMP market’s increased open interest suggests that traders are hedging against further price declines or anticipating a future rise, potentially due to seasonal supply constraints or geopolitical shifts that might impact global trade flows. 

Despite the volatility surrounding dairy segments, the slight dip in the average price of whey futures reflects sfutures’tion in the market. Current whey prices align with ongoing demand for high-protein dairy products, maintaining stable open interest. This stability could position whey as a valuable buffer in portfolio diversification, particularly with sustained demand from protein-centric sectors. 

As we dissect these trends, we must recognize the underlying influences and consumer behavior patterns that underscore the volatility in dairy markets. The interplay of supply chain flexibilities, regional production adjustments, and changing consumer demands will determine how market players strategize their operations. Embracing adaptable strategies and staying informed on market shifts could mean capitalizing on emerging opportunities or bearing the brunt of adverse market conditions.

SGX Futures Trading: A Marketplace Grappling with Shifts 

The SGX futures trading shows a market experiencing significant changes. To understand what these mean, let’s examine the key stats for Whole Milk Powder (WMP), Skim Milk Powder (SMP), AnLet’sus Milk Fat (AMF), and butter. 

Last week, the SGX saw extensive trading, with WMP leading at 8,804 lots. However, from Dec 24 to Jun 25, WMP’s price fell by 2.0%, averaging $3,908. TWMP’srop might indicate that the market is worried about too much supply or changes in demand from big buyers like China, which can significantly affect the global market. 

SMP also showed weakness, with a 1.8% decrease, ending at $2,943. This trend shows ongoing challenges as buyers change their buying strategies amid changing demand and supply worries. The strength of the US dollar can also affect SMP’s global prices. Though with SMP’s trades at 170 lots, Dollar’s market saw a 1.0% drop, with prices at $7,193. Changes in AMF prices can signal shifts in consumer choices, like moving towards healthier options. A drop in AMF prices might mean a more significant change in luxury dairy products. 

Finally, 25 lots of butter were traded, and the price dropped 0.8% to close at $6,556. This could point to adjustments after the holiday surplus or buying strategies anticipating price changes. The slight drop in butter prices shows the balance between production in places like the EU and global demand. 

Overall, SGX trading provides essential insights into global dairy markets. Price changes across these products suggest cautious global sentiment influenced by political issues, trade policies, and changing consumer demand. To handle these complex cases effectively, those in the dairy sector must stay flexible and aware of market trends.

Churning Challenges: Europe’s Dairy Price Dip and Its GlobalEurope’s

The European dairy market recently experienced a downward adjustment, with notable shifts in quotations for key products such as butter, skimmed milk powder (SMP), whey, and whole milk powder (WMP). Each movement reflects underlying market dynamics and has implications for European producers and the broader global market. 

Butter prices experienced a significant downturn. The index fell by €213 (-2.1%) to €7,547, signaling a contraction that may pressure producers reliant on high returns from this product. This trend wasn’t uniform across the region, with French butter prices declining steeply by €490 (-6.3%), while German prices remained stable at €8,150. Dutch butter also mirrored the regional decline, losing €150 (-2.1%). Despite a substantial year-over-year increase of 36.9%, this softening of butter prices suggests that producers might have to reassess their cost structures or output to maintain competitiveness. 

SMP quotations retreated, down €18 (-0.7%) to €2,622. Variances were noted within individual countries; German SMP fell by €65 (-2.5%), whereas French SMP saw a slight rebound of €10 (+0.4%). The Dutch market remained static with no change. For producers, such fluctuations in SMP prices necessitate dynamic pricing strategies and operational flexibility to remain viable in volatile conditions. 

Meanwhile, the whey market exhibited modest movements, with an average price decrease of €4 (+0.6%) to €878. French whey prices declined by €10 (-1.1%), while Dutch and German prices held steady. The whey market’s 8.8% year-over-year increase may continue to support the job market’s stability. However, producers must remain vigilant against potential future downturns. 

WMP also succumbed to price reductions, dropping €25 (-0.6%) to €4,343. The French market also posted a more pronounced decline of €30 (-0.7%), whereas Dutch prices remained stable. German quotations weakened by €45 (-1.0%). Whether these declines are transient or indicated, a prolonged trend can significantly impact production decisions and inventory management strategies. 

These price adjustments signify potential volatility ahead for European dairy producers. While cost management and efficiency improvements are crucial at the production level, understanding global demand flows is equally vital. Price movements in European quotations reverberate through the global market, influencing international trade dynamics and competitiveness. Producers must navigate these changes astutely, balancing strategies between local optimization and global market opportunities.

A Cheese Conundrum: Grappling with the Euro-Tide 

European cheese indices have been navigating turbulent waters, as evidenced by the latest price shifts for key varieties like Cheddar, Gouda, and Mozzarella. The EEX Cheese Indices show a downturn for the fourth consecutive week, marking a distinctive trend that warrants close attention from market participants. Cheddar, a staple in the cheese market, saw a slight decrease of €16, landing at €4,774. This marks a 15.2% increase year-on-year, yet the recent decline poses questions about the sustainability of its growth. 

Mild Cheddar experienced a similar fate, with prices slipping €12 to €4,783 despite being 16.8% higher than last year. This reflects a robust annual performance but raises concerns amid recent dips. Meanwhile, Young Gouda witnessed a more pronounced downturn, dropping €114 to €4,303, still 5.5% up from a year ago. These figures suggest a short-term volatility that contrasts with its longer-term uptrend. 

Even more striking is the situation with Mozzarella, which saw a significant decrease of €177 to €3,925. Despite being 5.3% above last year’s levels, Mozzarella’s substantial week-to-week drop signals potential headwinds year’sntaining Mozzarella’srajectory. 

Several factors contribute to these fluctuations. Seasonal demand, inventory levels, and changes in consumer preferences all play critical roles. The European market currently faces an oversupply of certain dairy products, exerting downward pressure on cheese prices. Additionally, consumer shifts towards non-dairy products and price sensitivity may influence these indices. The Euro’s relative weakness in the international market makes European cheese more attractive to overseas Europeans, yet it simultaneously challenges local pricing stability. 

The potential impact on the market could be profound. Continued price adjustments are likely to affect both producers and retailers. For producers, these trends may require strategic pivots, such as adjusting production levels or exploring new markets to offset domestic price challenges. Retailers might need to revise their pricing strategies to align with the changing cost structures, which could ultimately affect consumer prices and demand patterns. 

Overall, the current dynamics in the European cheese indices highlight the intricate balance between supply, demand, and external economic factors. This adjustment period offers challenges and opportunities for stakeholders across the dairy supply chain, calling for adaptive strategies and foresight in navigating the unfolding market conditions.

Reading Between the Lines: Decoding Subtle Signals in GDT Pulse Auction

The recent results from the GDT Pulse Auction highlight small but essential changes in the global dairy market. The average price for Fonterra Regular C2 Whole Milk Powder (WMP) fell to $3,900, a $40 decrease, or 1.0%, from last week’s event. While this drop might not seem like much, it reflects different forces shaping global demand. 

This price drop could lead to a market being cautious about seasonal changes or reacting to more significant economic events that affect buyer confidence. Since WMP is an essential product in the dairy industry, any price changes could signal deeper market trends. 

Similarly, Fonterra’s Skim Milk Powder (SMP) price decreased by $70, a 2.4% drop from the last GDT auction. This suggests less Fonterra’sand or a phase in which buyers adjust their buying habits due to changing economic conditions. 

These small price changes show that global buyers are cautious. They might be reacting to ongoing political issues, trade barriers, or changes in production that affect supply and demand as dairy farmers and industry leaders watch these trends, whether these price signals indicate a more significant trend or are just temporary adjustments in the complex global economy.

Harvesting Hope and History: Ireland, France, and Denmark Milk the Spotlight

Milk collection trends are creating a buzz in the dairy industry, with Ireland, France, and Denmark being key players. In October, milk collections in Ireland jumped 14.8% from the previous year to 696,000 tonnes. However, the total collections for the year remain 2.9% lower than in 2023. This suggests some ups and downs in production, which could affect Ireland’s contributions to supply as the year continues. 

On the other hand, France’s milk production is steadily increasing. In October, collections reached 1.88 million tonnes, a 1.1% rise from the Ireland’syear. For all of 2024, French milk collections are up 1.5% compared to last year. The stability of France’s milk production helps balance the ups and downs in other major dairy-producing countries. This steady growth in France is essential for stabilizing the global supply, especially when France’s situation is uncertain. 

Denmark’s October collections dropped slightly by 0.3% from the previous year, bringing total collections to 4.78 million tonnes. Although these small changes are not alarming, they show that Denmark is careful about its position in the global market. Such trends suggest that Danish producers might only increase production with more market demand. 

These regional trends are having a growing impact on the global milk supply. Ireland’s recovery, with France’s steady growth and Denmark’s stability, creates a picture of production patterns. Depending on how their production paths change with economic and climate Ireland’ss, their production amounFrance’s either support or Denmark’se global supply chain. 

Echoes of Volatility: Class III and IV Futures in the US Dairy Market

The ups and downs in the US dairy markets are making waves, mainly affecting Class III and IV futures. Class III futures surged this week, primarily due to a boom in the whey sector. CME spot whey powder jumped by 8.25%, a 12% rise in five days. With spot whey nearing 79.25 cents per pound, close to its all-time high, experts are questioning if this increase can last. Massive demand for high-protein whey pushes production away from ordinary whey powder, as shown by a 10.2% decrease in US whey powder output from last year. 

The cheese market is also doing well, with prices bouncing back. CME spot Cheddar blocks and barrels have risen to $1.80 and $1.7275, respectively. Plenty of milk keeps cheese production in full swing, even as inventory grows without slowing demand. US cheese is still the cheapest in the world, keeping exports strong. The future market suggests prices increase in the second half of 2025, allowing producers to use risk management tools to lock in good profits. 

On the other hand, Class IV futures saw a slight dip as CME spot nonfat dry milk (NDM) dropped slightly to $1.3775. Global milk powder prices show mixed signals, though European exporters are hopeful, helped by a weak euro. Export opportunities are looking up, especially in China, where local supplies are low, sparking interest in buying from abroad. Due to strong demand in China and Southeast Asia, New Zealand’s Fonterra is upping its pay-price forecast. This gives hope to New Zealand dairy farmers, backed by a 2.8% increase in milk solids output for October during the peak season. 

These trenZealand’sght a bigger story: the US dairy market’s ability to stay strong despite global changes. As Class III futures rise and Class IV holds steady, unpredictable input costs remain a concern. However, innovative market actions can turn these challenges into opportunities. The current market calls for a strategic approach for the US market, balancing short-term uncertainties with long-term potentials in an industry looking for leadership and insight.

The Currents of Grain and Dairy: Navigating Economic Ripples

The global dairy market is influenced by more than just milk production—it also depends heavily on commodities like corn and soybeans. These grains are key ingredients in dairy feed, and their price changes can impact feed costs and overall dairy production. 

The USDA recently highlighted an increase in corn usage, driven by higher ethanol production and exports, which affects demand. This increased demand is raising corn prices. Since corn is a central part of cow diets, rising prices mean higher costs for dairy farmers. 

Soybeans, especially soybean meal, are a vital protein source for animal feed. The recent drop in soybean futures has had a mixed impact on the dairy industry. Lower soybean prices might help reduce feed costs but also point to tricky international trade issues that could influence future supplies. 

These economic factors are closely connected to dairy production. Higher feed costs might lead farmers to alter the number of cows or the amount of milk they produce, affecting the whole milk supply chain, from raw milk availability to global exports. 

In conclusion, corn and soybean prices are key factors in navigating global trade and economic conditions in the dairy market. They significantly influence feed costs and, in turn, the production and profitability of the dairy industry worldwide.

The Bottom Line

As we finish our look at the latest in the global dairy market, one thing is clear: change is the new normal. With falling prices in Europe’s dairy goods and the ups and downs in US Class III and IV markets, these changes require a thoughtful response from everyone involved. Our analysis stressed the need to monitor the market and use risk management tools to protect your business during unceEurope’smes. 

These changes present both problems and opportunities for dairy farmers and industry professionals. They remind us to keep checking the balance between what it costs to produce and what the market might pay. We should also consider how changes in international demand, especially from growing markets like China, can affect our export strategies. Fonterra’s hopeful adjustments and the outlook for dairy futures show that while today’s market is shaky, there can be rewards if we navigate wisely. 

As we move forward, consider these questions: How can your business adapt to this ever-changing environment, and what can you do to turn possible market downturns into opportunities for growth today? Are there partnerships or new technologies that could provide support or an advantage? 

Staying informed and flexible will help shape your business’s future in this uncertain world. 

Learn more:

• Mid-Year 2024 Global Dairy Business Review: Key Developments from January to June
• Global Dairy Market Trends July 2024: Australia’s Rise as Argentina and New Zealand Face Challenges
• Slow Global Dairy Price Recovery Anticipated, Rabobank Analysis Shows: Unpacking the Market Trends

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.