The latest Global Dairy Trade (GDT) auction concluded with a price drop for key dairy commodities, driven by expanding inventories and cautious demand. However, a resurgence in export market demand is likely due to the El Niño weather phenomenon, which could cause adverse weather conditions and a short-term reduction in milk production across Oceania and Latin America.
On Tuesday, July 7, the 407th GDT auction took place, concluding with the price index settling at 1121, down 58 points (-4.9%) compared to the previous auction. The average price for dairy products stood at 3,793 USD per ton, which is 186 USD less than the results of the prior event. A total of 26,316 tons of commodities were sold during the auction, representing a 13,394-ton increase compared to the last trading session. The minimum supply was recorded at 11,664 tons, while the maximum reached 13,297 tons. The event saw participation from 148 dairy market operators, down by 3 companies compared to June 16.
Following the auction results, the price for Anhydrous Milk Fat (AMF) settled at 6,341 USD per ton, decreasing by 3.9% from the previous auction. According to Rabobank, New Zealand's milk production reached new record highs in the 2025/26 season, leading to a surplus supply of dairy products hitting the market in recent weeks and putting downward pressure on commodity prices. According to GDT forecasts, the price for anhydrous milk fat could increase by 4.5% in August and by 1.4% in September.
The price for Butter at this auction stood at 5,336 USD per ton, down 5% compared to the previous trading event. According to FAO data, butter prices declined in June due to an increased supply of raw milk and higher butter production in the EU and the US, which boosted global export availability and intensified international market competition. Butter prices remained under pressure due to the expanding supply of milk fat. As reported by DG AGRI, in late June, butter prices decreased to 4,529 USD per ton (-1.6%) in the EU, 5,838 USD per ton (-2.3%) in Oceania, and 3,492 USD per ton (-6.4%) in the US compared to the first half of June 2026.
Manufacturers' warehouses have accumulated substantial butter inventories as a result of global raw milk overproduction in recent months and reduced shipments to Gulf countries, driven by the US-Israel conflict with Iran and logistical disruptions stemming from the blockade of the Strait of Hormuz. According to DG AGRI, a 19% drop in China’s butter imports during January–February 2026 further contributed to sustained heavy butter supplies on the market. AHDB data shows that the United Kingdom has been scaling back its butter export volumes for the second consecutive quarter. While the price of British butter was lower than in Oceania, it remained higher than in the US and the EU.
However, global butter supplies may tighten and prices could strengthen, as the El Niño phenomenon threatens to curb raw milk production volumes in South America, Australia, and New Zealand. On the flip side, prices face pressure from the food industry's use of cheaper vegetable fats, primarily palm oil, as a substitute for milk fat. Due to excessively high butter prices in previous years, confectioners began altering their product formulations, opting for fat blends instead of pure butter. While roughly 40% of butter was traditionally used in food manufacturing, a return to ultra-high prices now appears unlikely. Auction organizers expect that butter prices may decline by 4.4% in August and by 7.5% in September.
The price for Whole Milk Powder (WMP) settled at 3,425 USD per ton, dropping 4.4% compared to the previous auction results. According to the FAO, whole milk powder prices decreased in June as sluggish import demand from China outweighed stable purchasing from Southeast Asia and the Middle East, despite a seasonal decline in Oceania's milk production. By the second half of June, WMP prices fell to 3,781 USD per ton (-3.2%) in the EU, 3,638 USD per ton (-2%) in Oceania, and 5,181 USD per ton (-3.7%) in the US. According to the USDA, South American suppliers did not participate in the latest tender held by the Algerian state agency, ONIL, for whole milk powder deliveries. Only limited batches of the commodity were shipped to Algeria from New Zealand. Consequently, surpluses of whole milk powder in South America are expected to exert pressure on prices.
Demand growth for whole milk powder may be constrained by the rising consumption of fat-filled milk powder. According to CZApp, Fat-Filled Milk Powder (FFMP) has become a critical alternative to WMP in price-sensitive dairy markets. By combining skim milk powder with cheaper vegetable fats, FFMP delivers the necessary functional properties of dairy ingredients at a lower cost. In several nations across Africa, the Middle East, and Southeast Asia, dairy consumption continues to rise, but consumer purchasing power remains limited. Consumers and processors still desire a dairy flavor, nutritional value, and technological performance, but they are not always prepared to pay the premium for whole milk powder. When the price gap between WMP and cheaper alternatives widens, FFMP becomes a more attractive choice.
According to CZApp, Brazil could emerge as the largest sales market for whole milk powder amid risks tied to this year's El Niño event. Per the AHDB, an expansion of New Zealand’s dairy exports to China and Southeast Asian nations was anticipated due to the Middle East conflict, which reshaped trade flows. The USDA reports that despite hot weather and reduced raw milk production in Europe, whole milk powder inventories remain substantial, while buyer activity is moderate. Meanwhile, a lull is being observed in the US whole milk powder market. Auction organizers forecast a price decline for the commodity of 3.7% in August and 4.5% in September.
The price for Skim Milk Powder (SMP) stood at 3,135 USD, down 7% compared to the previous auction results. Demand for protein products remains consistently high. According to the FAO, skim milk powder prices declined after five months of uninterrupted growth. The recovery of SMP production volumes in the EU and increased supply in the US coincided with a softening of demand in destination markets following several months of rising prices. Ornua estimates that despite the positive trend in the protein market, further price strengthening for SMP is unlikely, as global supply has peaked and consumers are cutting back on expenditures due to inflation. According to USDA data, substantial skim milk powder stocks in Europe are weighing on prices. Demand for American SMP remains weak both domestically and in export markets, with Mexico being the sole exception. According to DG AGRI, in the second half of June, the SMP price dropped to 3,156 USD per ton (-4.1%) in the EU, 3,663 USD per ton (-0.3%) in Oceania, and 3,687 USD per ton (-21%) in the US.
Incremental demand is gradually shifting away from China to more price-sensitive importing regions. Buyers are looking to hedge risks and build up SMP inventories in anticipation of potential supply disruptions. CZApp forecasts that major SMP importers like Brazil, Mexico, and Southeast Asia will likely open their markets to EU suppliers—where the product is cheaper than in the US and New Zealand—amid risks associated with the impact of El Niño. Specifically, the USDA reports that milk production has begun to decline in South America under the influence of wet weather and degraded pastures. According to CZApp, India also remains a potentially massive importer that could significantly impact the market if the monsoon season proves weak and foraging conditions deteriorate. According to GDT projections, skim milk powder could cheapen by 1.2% in August and by 6.6% in September.
Cheddar Cheese fell to 3,900 USD per ton (-12.3%), while Mozzarella Cheese rose to 3,897 USD per ton (+3.8%). According to the FAO, cheese prices declined in June due to higher milk availability and increased cheese production in the EU and the US, which expanded export availability and intensified global market competition. Cheese prices continued their downward trend for the eleventh consecutive month, as export supply consistently outstripped global import demand. According to DG AGRI, in the second half of June, Cheddar prices fell to 3,620 USD per ton (-1.1%) in the EU, 4,550 USD per ton (-1.9%) in Oceania, and 3,226 USD per ton (-0.7%) in the US.
As reported by the USDA, cheese demand from retail and foodservice sectors in the US remains sluggish, and export demand for American cheeses is lower than at the start of the year. According to Ornua, cheese prices have stabilized but could see a short-term lift. Cheese demand is present in Southern Europe during the summer holiday season. The USDA notes that EU cheese production is mostly stable, but Mozzarella stocks are tighter compared to other cheese varieties.
According to the AHDB, UK cheese exports began to contract following a growth period that lasted nearly a year. Logistical bottlenecks resulting from the Middle East conflict negatively impacted cheese shipments from Europe to Gulf countries. Conversely, demand for British cheese in export markets—particularly in China, Indonesia, the Middle East, and North Africa—remained active due to its lower price point compared to products from Oceania. Trading organizers expect Cheddar cheese to drop by 12% in October, while Mozzarella could appreciate by 3% in September.
Lactose cheapened to 1,732 USD per ton (-3.6%). According to the USDA, lactose inventories on the market are tight, with most volumes already contracted and sold out for the third quarter. Typically, the lactose market experiences an off-season during the summer. In this period, sales often contract due to reduced demand from manufacturers of dry dairy products, coupled with lower business activity among European food industry enterprises during the summer vacation season. According to GDT forecasts, lactose could cheapen by 3.6% in September.
Buttermilk Powder (BMP) rose to 3,786 USD per ton (+8.2%). According to the USDA, buttermilk powder stocks in the US are tight, as processors prioritize the production of skim milk powder. Demand for the commodity remains stable in export markets. Auction organizers expect that buttermilk powder could appreciate by 15% in August and by 5% in September.
The next GDT trading event will take place on July 21
Press service of the Association of Milk Producers
Follow us on LinkedIn
Related News