Prices for milk powder, buttermilk powder, and anhydrous milk fat strengthened against the background of a slowdown in milk yield volumes in Europe during a period of severe heat. However, Cheddar cheese prices collapsed, and butter slightly cheapened due to slow demand in sales markets during the summer vacation period and the presence of substantial inventories of exchange-traded commodities in warehouses that accumulated in previous weeks.
On Tuesday, July 21, the 408th GDT auction took place, based on the results of which the price index changed its vector to upward and stood at 1,139, which is 18 points (+1.5%) more relative to the previous auction, interrupting the price decline cycle that lasted the last four months. We hope that this trend will continue in the next auctions as well, which will become a reason for the growth of procurement prices for raw milk.
The average price for dairy products stood at 3,815 USD per ton, which is 22 USD more relative to the results of the previous auction. During the auction, 26,889 tons of exchange-traded commodities were sold, which is 573 tons more relative to the results of the last auction. The minimum offer was fixed at the level of 24,745 tons, and the maximum – at the level of 30,422 tons. 167 operators of the dairy market took part in the auction, which is 19 companies more relative to July 7.
Based on the results of the auction, the price for anhydrous milk fat stood at 6,405 USD per ton, which is 1.1% more relative to the previous auction. According to CMB News, the supply of cream is reducing in EU countries. Likely, this was supposed to contribute to a moderate recovery of dairy fat prices after the previous decline. At the same time, buyers remain sensitive to the price level, and dairy inventories in certain EU countries still remain sufficient to cover demand. According to information from traders, demand in export markets is affected by consumer spending on food purchases under conditions of high fuel costs. According to the GDT forecast, in August the price for anhydrous milk fat may decrease by 0.2%, and in September it may increase by 0.2%.
The price for butter at this auction stood at 5,303 USD per ton, which is 0.6% less relative to the previous auction. According to CMB News, the supply of cream is reducing in EU countries, which likely contributed to a slowdown in the rate of decline in butter prices. According to DG AGRI, as of July 12, butter prices increased in the EU by 5 euros, to 388 euros per 100 kg relative to July 5.
In the American market, there are prospects for intensifying demand for butter from bakeries on the eve of Labor Day, which in the US is celebrated on the first Monday of September. As CZApp reports, in the US more cream is used for ice cream production rather than butter. However, the impact of the heat on milk yield volumes at modernized farms in the US was less substantial than in Europe. No hype is observed in the butter market despite the reduction in cream supply, and the impact of the heat offsets the seasonal slowdown in demand for the commodity. Auction organizers expect that in August the butter price may decrease by 0.5%, and in September it may decrease by 0.8%.
The price for whole milk powder stood at 3,486 USD per ton and increased by 1.6% compared to the results of the previous auction. As USDA reports, in the EU commodity prices strengthened against the background of a slowdown in milk yield volumes under the influence of heat. According to DG AGRI, as of July 12, the price for whole milk powder in the EU increased by 7 euros, to 325 euros per 100 kg relative to July 5. Demand for whole milk powder is substantial in Brazil. However, a more substantial increase in the price of whole milk powder did not occur due to lower commodity prices in the US against the background of slow demand and sufficient warehouse inventories. Inventories of whole milk powder accumulated in South America against the background of slow demand from Algeria. The New Zealand cooperative Fonterra revised its raw milk price forecast for the 2026/27 production season downward after the decline in whole milk powder prices based on the results of the previous auction.
At the same time, Fonterra and the Irish dairy cooperative Ornua warn that prolonged heatwaves in Europe may lead to a reduction in raw milk intake for processing, and an increase in the probability of the El Niño natural phenomenon may significantly limit the growth of milk production in the world's main exporting regions, namely in the pasture farms of New Zealand and in the south of the US. According to the Ornua forecast, in the third and fourth quarters, a seasonal reduction in milk supply and a traditional revival of demand from the processing industry should support global dairy prices starting in September.
Dairy product prices will likely remain at the current level in the absence of weather anomalies or a sharp increase in global demand. According to Raboresearch, the expected decrease in raw milk supply forces leading processors to reorient raw milk from the production of more volatile exchange-traded commodities, such as milk powder and butter, to products with higher added value and more stable profitability. Auction organizers predict an increase in the commodity price by 0.9% in August and by 1.6% in September.
The price for skimmed milk powder stood at 3,234 USD, which is 2.8% more relative to the results of the previous auction. According to USDA data, skimmed milk powder prices strengthened in the EU against the background of a reduction in cream supply under the influence of summer heat. According to DG AGRI, as of July 12, the price for skimmed milk powder in the EU increased by 1 euro, to 270 euros per 100 kg relative to July 5. According to CMB News, the supply of skimmed milk concentrate reduced in EU countries, which contributed to a moderate recovery of skimmed milk powder prices after the previous decline. However, buyers remain sensitive to the price level, and dairy inventories in certain EU countries still remain high.
As CZApp reports, skimmed milk powder prices demonstrate signs of stabilization. Market participants note that prices have likely reached a minimum level, and buyer interest is gradually recovering. Steady demand for high-protein dairy ingredients contributed to the reorientation of a larger portion of raw milk to the production of condensed skimmed milk and ultrafiltered products, which influenced the price growth. According to Ornua, the high cost of living forces final consumers to be more cautious about purchases, while European exporters continue to lose global market share to American competitors.
However, a more substantial price growth for the commodity is restrained by slow demand in export markets, which influenced the weakening last week of skimmed milk powder prices in the US, Oceania, and South American countries, as USDA reports. The exception is Mexico, where interest in American commodities intensified against the background of downtime at certain milk processing enterprises in the region. According to the GDT forecast, in August skimmed milk powder may become more expensive by 0.4%, and in September by 2.3%.
Cheddar cheese cheapened to 3,586 USD per ton (-6.5%), and Mozzarella cheese became more expensive to 3,940 USD per ton (+1.3%). According to USDA data, demand for cheeses slowed down in the US in July against the background of higher prices for the commodity in retail networks, but in Europe it intensified in tourist regions, in particular for Mozzarella cheese. According to CZApp, the cheese market remained balanced despite the seasonal reduction in raw milk supply. However, in Europe the heat affected the reduction of milk yield and the slowdown of cheese production volumes, which contributed to the strengthening of prices. According to DG AGRI, as of July 12, the price for Cheddar cheese in the EU increased by 4 euros, to 331 euros per 100 kg relative to July 5.
According to Raboresearch, the expected decrease in raw milk supply forces leading processors to reorient raw milk from the production of more volatile exchange-traded commodities, such as milk powder and butter, to products with higher added value and more stable profitability, in particular cheeses, whey products, and specialized ingredients for functional nutrition.
According to EINPresswire, the global low-fat cheese market enters a period of sustainable growth as consumers increasingly prefer healthier nutrition without giving up familiar taste. Low-fat cheese has become a popular ingredient for sandwiches, pizza, salads, pasta, and ready-to-eat food products, which is why it is actively used both in home consumption and in food service establishments. Auction organizers expect that Cheddar cheese may cheapen by 2.5% in September, and Mozzarella cheese may become more expensive by 1.3% in September.
Lactose became more expensive to 1,721 USD per ton (+2%). According to CZApp, lactose prices demonstrated moderate growth thanks to limited inventories and high demand under long-term contracts. As USDA reports, certain buyers are reducing lactose purchases and looking for alternatives against the background of excessively high prices for the commodity. According to the GDT forecast, lactose may become more expensive by 2% in September.
Buttermilk powder became more expensive to 4,737 USD per ton (+10.5%). According to USDA data, buttermilk powder inventories in the US are limited, as processors prefer the production of skimmed milk powder. Supply of the commodity is limited in the spot market. Auction organizers expect that buttermilk powder may become more expensive by 11.6% in August and by 10.2% in September.
The next GDT auction will take place on August 4.
Press service of the Association of Milk Producers
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