Weakening prices for Cheddar cheese and anhydrous milk fat restrained the growth of the price index, but the price of butter rose, likely driven by intensified purchasing by large industrial buyers.
On Tuesday, May 19, the 404th GDT Auction took place, resulting in a price index of 1221, which is 7 points (+0.6%) higher compared to the previous auction. The average price for dairy products was 4,198 USD/mt, up 71 USD from the previous auction results. During the auction, 12,972 tons of commodities were sold, which is 771 tons less than the last auction. The minimum supply was recorded at 12,245 tons, and the maximum at 16,233 tons. 154 dairy market operators participated in the auction, which is 13 companies fewer than on May 5.
According to the results, the price for Anhydrous Milk Fat (AMF) was 6,344 USD/mt, down 1.6% compared to the previous auction. According to the USDA, milk fat prices weakened in the upper price range amid substantial supply and weak demand for the commodity. According to the GDT forecast, AMF prices may decrease by 2.2% in June and by 0.9% in July.
The price for Butter at this auction was 5,674 USD/mt, up 2.5% compared to the previous auction. According to the USDA, in the first half of May, butter prices in the EU declined due to expanding inventories and a seasonal increase in raw milk production. Butter prices also weakened in Oceania due to increased product availability and stiffer competition from the U.S. in export markets. The United States is selling butter at prices below those on international markets.
In March, Oceania partially offset the reduction in butter export volumes to China by increasing shipments to other Asian countries, the EU, and North America. However, demand for the commodity is being restrained by logistical obstacles caused by the war of the U.S. and Israel against Iran. In 2023–2024, butter was the driver of prices for raw milk and other dairy products. During this period, butter consumption began to recover in the U.S. after years of margarine consumption and the misguided viewpoint regarding the health risks of butter.
From 2020 to 2024, butter prices rose by nearly 25%, reaching peak values in the second half of 2024 and early 2025. Concurrently, cheese prices also increased, supporting raw milk prices. However, butter inventories began to grow due to rising raw milk production in the U.S., New Zealand, and the EU throughout 2025. The dairy sector lacks sufficient capacity to manufacture more complex and high-margin products. Therefore, surplus milk is primarily channeled into butter production.
Consequently, the overproduction of these commodities led to a product surplus on the market, which began to pressure prices. Large industrial buyers have actively started contracting for butter delivery through the first quarter of 2027 at the current low prices. In the long run, this should help reduce accumulated inventories. Auction organizers expect the butter price to increase by 1.3% in June and by 3% in July.
The price for Whole Milk Powder (WMP) was 3,772 USD/mt, an increase of 1.2% compared to the previous auction results. According to the USDA, WMP prices decreased in the U.S. but rose in New Zealand and South America on the back of high skim milk powder prices and strong demand in export markets. Notably, in March, New Zealand increased milk powder shipments to China and the North African region. However, prices for the commodity weakened in Europe in the lower price range.
NZX dairy market analyst Rosalind Crickett believes that despite the global increase in milk production, the costs of fuel, fertilizers, and cattle feeding have risen due to the Middle East crisis, while logistical obstacles have driven up costs for food manufacturers. The market activity is explained by the fact that buyers are secure long-term contracts for finished product delivery at current low prices before they increase. Auction organizers forecast a price increase of 1.8% in June and 1.1% in July.
The price for Skim Milk Powder (SMP) was 3,552 USD/mt, up 0.2% compared to the previous results. According to the USDA, global demand for milk powder is high, particularly in Mexico, and prices for the commodity rose in Oceania, the U.S., and the EU. SMP in Oceania costs more than in Europe. Latin American producers are securing contracts for SMP delivery to the North African region. Product manufacturing is declining in Argentina. According to the GDT forecast, SMP prices may rise by 0.4% in June and 0.2% in July.
Cheddar cheese fell to 4,560 USD/mt (-1.3%), while Mozzarella rose to 4,127 USD/mt (+2.9%). According to the USDA, American cheesemakers are channeling surplus raw milk into cheese production. Demand for cheese is stable in the U.S. market ahead of the barbecue season. In export markets, cheese demand is also active. Large-scale cheese purchases continue in Southern European countries ahead of the tourist season.
Demand for European cheeses remains stable in export markets. In Oceania, cheese prices declined in the lower price range due to a reduction in shipments to China compared to the same period last year. Oceania increased cheese shipments to Europe and Central America. Organizers expect Cheddar to decrease by 2.9% in June and increase by 1.3% in July, while Mozzarella may rise by 3.1% in July.
Lactose increased to 1,529 USD/mt (+0.5%). According to the USDA, demand is active in export markets, primarily in Asia. Lactose inventories are limited, and certain manufacturers have already sold out their supply until the end of summer. Some buyers are interested in securing contracts for product delivery in the third quarter. Lactose prices weakened in the lower price range.
According to the GDT forecast, lactose may rise by 0.5% in July.
The next GDT Auction will take place on June 2.
Press service of the Association of Milk Producers
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