Following the latest auction session, the price index has increased due to a resurgence in demand for skimmed milk powder in export markets, reports Georgii Kukhaleyshvili, analyst at the Association of Milk Producers of Ukraine.
On Tuesday, April 1, the 377th GDT auction took place, resulting in a price index of 1265, rising by 14 points (+1.1%) compared to the previous auction. The average price of dairy products was $4,250 per ton, which is $5 higher than the last auction. During the session, 17,643 tons of exchange-traded dairy commodities were sold, down by 1,437 tons from the previous auction. Minimum supply was recorded at 16,516 tons, while maximum supply reached 20,879 tons. A total of 163 dairy market operators participated, which is 12 companies fewer than on March 18.
The price of anhydrous milk fat reached $6,705 per ton, increasing by 2.3% compared to the previous auction. This price hike might be linked to the end of Ramadan in Muslim-majority countries in Asia and Africa, as well as the start of the ice cream production season, which utilizes anhydrous milk fat. According to Future Market Insights, as consumer demand for functional and nutrient-rich ingredients with added value continues to grow, the anhydrous milk fat market is expected to expand significantly, potentially reaching $5.2 billion by 2034. In the bakery, confectionery, and dairy dessert sectors, anhydrous milk fat is highly valued for enhancing texture, taste, and shelf life. Fast food chains and major food producers also incorporate milk fat due to its versatility and high fat content. Companies like Fonterra and Dairy Farmers of America are increasing their production capacities to meet the needs of both developed and developing nations.
However, the U.S.–Mexico trade war is complicating the global anhydrous milk fat market. According to Dairy News Today, Mexico imports this product from New Zealand for re-export to the United States. After the Trump administration imposed 25% tariffs on goods from Mexico and Canada, concerns emerged regarding continued exports of anhydrous milk fat to the U.S. The potential loss of access to the American market may hinder demand for this commodity. Mexico purchases approximately 10% of the anhydrous milk fat produced in New Zealand. According to an OECD forecast, American tariffs may trigger an economic downturn in Mexico, potentially affecting domestic demand for dairy products. Auction organizers expect a 1.3% price increase in May and a further 2.4% rise in June.
Butter prices at this auction stood at $7,602 per ton, down 1.2% from the previous auction. According to USDA data, U.S. dairy processors are stockpiling butter for sales in the third and fourth quarters. Butter production is declining in Oceania, making American butter attractive to international buyers. There remains steady interest in New Zealand butter across global markets. Demand for butter is active in retail chains in the U.S. and Oceania ahead of Easter and spring holidays, though sluggish among food processing companies. In Europe, butter supply is limited. Some buyers are purchasing small quantities to meet immediate needs, while others are waiting for price reductions.
CoBank’s Chief Dairy Economist, Cory Geiger, warns that the U.S.–Mexico trade war could present challenges for the American dairy sector. Mexico remains the top market for U.S. dairy exports. Geiger believes that sales of dairy products to Mexico have strong growth potential as more Mexican consumers move into the middle class and seek higher-quality proteins and fats. Currently, the average Mexican citizen consumes only 45% of the dairy volume that an average American consumes. There is significant potential to boost U.S. dairy sales to Mexico. Presently, Mexico purchases 4.5% of all milk produced in the U.S. in the form of finished products and ingredients. American exporters are shifting focus toward Asian and African markets, where European, New Zealand, and South American producers already operate, potentially increasing competition. According to GDT forecasts, butter prices may decline by 1.8% in May and 1.3% in June.
Whole milk powder was priced at $4,062 per ton, down 0.1% from the previous auction. USDA data shows that whole milk powder production in Oceania is shrinking amid seasonal declines in milk supply, while export demand remains weak. South American producers anticipate stronger demand in Q2 from Brazil and Algeria. U.S. whole milk powder prices have been stable over the past week, with mixed domestic demand and declining production levels. In the EU, milk previously used for whole milk powder production is being redirected toward cheese and butter production. Due to reduced Chinese import demand, European companies are cutting production and exports of whole milk powder in favor of other dairy products. The appreciation of the euro is also discouraging foreign buyers from purchasing European whole milk powder. GDT forecasts a potential 1.1% price increase in May, followed by a 0.8% decline in June.
Skimmed milk powder prices rose to $2,876 per ton (+5.9%). USDA data indicates that demand for South American skimmed milk powder grew at the end of Q1, driven by Brazilian buyers replenishing stock. Demand for Oceania-origin skimmed milk powder also increased in export markets. The end of Ramadan and the start of the ice cream season contributed to higher sales. However, the appreciation of the euro has made European skimmed milk powder less competitive internationally. U.S. demand remains sluggish, though export prices are appealing. The U.S.–Mexico trade war raises concerns about future exports, as Mexico has historically been a major buyer of American skimmed milk powder. Auction organizers forecast price increases of 1.3% in May and 7.1% in June.
Cheddar cheese rose to $5,018 per ton (+1.7%), while mozzarella cheese fell to $4,517 per ton (-4%). USDA data suggests that despite strong retail demand for cheese in the U.S., food processing industry demand remains weak. International interest in European cheese varies, though export prices remain competitive. Oceania’s cheese market remains active, with strong sales in retail and food industry segments. GDT forecasts a 4.1% price increase for Cheddar in May and 0.8% in June, while mozzarella prices may decline by 4% in June.
Lactose fell to $1,132 per ton (-2.6%). USDA reports stable domestic demand in the U.S., while export sales remain mixed. Auction organizers anticipate a 2.6% price drop in June.
Dried buttermilk fell to $2,807 per ton (-5.6%). USDA data indicates steady-to-moderate demand in the U.S., with buyers focusing on immediate needs rather than large-scale purchases. GDT expects a 5.5% price decline in June.
The next GDT auction is scheduled for April 15.