The price index moved into positive territory following the results of the trading event against the background of revitalized demand for milk powder in export markets, rising commodity prices in Europe and the US, and reduced production of it in Oceania. Price growth was also fostered by the limited supply of Mozzarella cheese in the spot market.
On Tuesday, August 18, the 410th GDT trading event took place, following the results of which the price index stood at 1166, which is 26 points (+2.3%) more relative to the previous trading event. The average price for dairy products stood at 3873 USD per ton, which is 95 USD more relative to the results of the previous auction. During the trading event, 41054 tons of exchange-traded commodities were sold, which is 550 tons more relative to the results of the last auction. The minimum offer was recorded at the level of 36340 tons, and the maximum – at the level of 43585 tons. 176 dairy market operators participated in the trading event, which is 6 companies more relative to August 4.
According to the results of the trading event, the price for anhydrous milk fat stood at 6343 USD per ton, which is 6% less relative to the previous trading event. According to DCA Marketing Intelligence data, last week cream prices fluctuated, but gradually grew due to the revitalization of demand and concerns of milk processing enterprises regarding the reduction of milk intake for processing after a dry summer and high temperatures in Europe. However, as USDA reports, demand for milk fat in Europe weakened and the current supply of the commodity satisfies market demand. According to the GDT forecast, in September the price for anhydrous milk fat grew by 0.6%, and in October it may decrease by 0.5%.
The price for butter at this trading event stood at 5090 USD per ton, which is 2% less relative to the previous trading event. According to FAO data, global prices for butter decreased against the background of increased supply of milk fat and export supply of the commodity. According to DG AGRI data, as of August 9, the price for EU butter stood at 394 EUR per 100 kg and decreased by 16 EUR relative to the previous week. According to USDA data, butter production in the EU decreased under the influence of a reduction in raw milk intakes at milk processing enterprises. However, demand for European butter is stable, and the supply of the commodity in the spot market is sufficient, taking into account large production volumes in previous months. As of August 11, the European exchange EEX projected the nearest contract price for August at 4000 EUR per ton with gradual growth during the winter to 4150–4300 EUR per ton. The current supply of cream and butter in Europe is generally sufficient, but market participants expect its reduction in 2027–2028. Demand for butter in the EU remains steady, and export competitiveness improved after price adjustments.
According to USDA data, in the US the supply of cream is sufficient despite heatwaves, and demand for butter is stable from retail networks, food industry enterprises, and buyers in export markets. The growth of costs for raw materials, energy resources, packaging, logistics, and labor may lead to a review of contract prices and butter prime cost in the US in the near future. Global prices for butter at the beginning of summer slightly decreased, but no sharp fall occurred. At the same time, futures prices on the EEX exchange indicate that market participants expect gradual appreciation of butter in the coming years.
According to USDA data, butter prices decreased in Oceania last week. Market participants in New Zealand do not plan to either increase or decrease planned butter sales volumes in the market. It is expected that the impact of the El Niño natural phenomenon will persist until early 2027, which may lead to unstable weather, deterioration of pasture conditions, disruptions in feed supplies, and increased production costs. For now, the impact of these factors on butter prices is limited, but the market already takes into account potential risks in the future. In China, the growth of demand for butter is mainly related to the food industry, where it is used for the production of bakery products and other items. Further expansion of the Chinese food industry may support high demand for butter. Auction organizers expect that in September the price for butter may decrease by 1.3%, and in October it may decrease by 1.6%.
The price for whole milk powder stood at 3591 USD per ton and increased by 0.3% compared to the results of the previous trading event. According to Czapp data, expectations of market participants regarding the arrival of large shipments of the commodity from New Zealand were not realized. As USDA reports, prices for whole milk powder in Oceania strengthened in the lower price range and remained stable in the upper range. Despite the fact that the existing supply of raw milk in key exporting regions remains sufficient, buyers are set to form stocks of whole milk powder in advance. Although demand for whole milk powder from mainland China slightly weakened, buyers from North Asia secured 38% of all purchases at previous GDT trading sessions, which indicates a recovery of interest in forming stocks for deliveries in October and November.
According to USDA data, last week buyer activity in the whole milk powder market in South America was stable. In the spot market of South America, stocks of whole milk powder exist. Local sellers increase prices for the commodity against the background of reduced production in Oceania. Interest in products from local suppliers exists in Algeria, but the unresolved issue with new import licenses holds back shipments of the commodity. According to Czapp data, for sellers from South America, more expensive freight creates an additional obstacle for deliveries to Algeria.
According to FAO data, in July prices for whole milk powder decreased due to weak import demand, especially from China, which outweighed active purchases in Southeast Asia and the Middle East. Additional pressure on prices was exerted by the intensification of competition among exporters. According to USDA data, demand for whole milk powder in the US is stable, and its warehouse stocks are limited outside contracted volumes. Heatwaves in the Northern Hemisphere and the consequences of the El Niño natural phenomenon cause concerns among market participants regarding the stability of milk production at the end of the season. A portion of buyers create additional stocks in conditions of geopolitical instability.
As the Irish Farmers Journal reports, last week prices for whole milk powder rose by 200 EUR in Europe as a result of a reduction in raw milk production under the influence of severe heat. A new heatwave in France and Great Britain may lead to a further reduction in raw milk deliveries for processing. If the corn harvest in Europe is weak, there will be less feed. Farmers will have to either increase the use of concentrated feed or reduce the cow herd. According to USDA data, demand for whole milk powder is active in Europe and in export markets, and the supply of the commodity is reducing in the spot market. Auction organizers forecast an increase in the price for the commodity by 1.9% in September and by 3.3% in October.
The price for skimmed milk powder stood at 3502 USD, which is 7.6% more relative to the results of the previous trading event. According to Irish Farmers Journal data, last week prices for skimmed milk powder began to recover, a ton of skimmed milk powder in Europe appreciated by 100 EUR. As USDA reports, demand for skimmed milk powder intensified in Europe against the background of reduced supply of raw milk under heat conditions. Also, buyers from other regions are interested in purchasing European skimmed milk powder in the spot market against the background of reduced production in Oceania. Buyers form stocks not only for current consumption, but as a reserve under conditions of unfavorable weather and geopolitical instability.
According to USDA data, in the South American market buying activity is stable, and demand for skimmed milk powder is deferred, while in Oceania and the US prices for the commodity strengthened last week. Demand for the commodity is active in the American market and from buyers from Mexico. The supply of raw material for drying is reducing in the US against the background of significant milk volumes arriving at enterprises producing drinking milk and preparing for the start of the school year, which are large consumers of packaged milk. Prospects exist for increasing deliveries of skimmed milk powder from the US to the Philippines against the background of changing dietary habits and growing consumption of dairy protein in this Southeast Asian country. According to the GDT forecast, in September skimmed milk powder may appreciate by 8.6%, and in October – by 7.6%.
Cheddar cheese appreciated to 3744 USD per ton (+0.6%), and Mozzarella cheese appreciated to 4234 USD per ton (+6.1%). As USDA reports, demand for cheeses is active in retail networks of Europe. Cheeses are also in demand from food industry enterprises. Buyers are most interested in Mozzarella cheese, as its supply is limited in the spot market. Some cheese factories direct raw milk to the production of Mozzarella cheese and reduce the output of other types of cheeses under conditions of reduced milk yields under the influence of heat. According to Irish Farmers Journal data, cheese prices remain stable in Europe. As DG AGRI reports, as of August 9, the price for Cheddar cheese in the EU stood at 337 EUR per 100 kg. Cheese appreciated by 6 EUR relative to the previous week.
American cheesemakers do not experience a shortage of raw milk despite the impact of heat on reducing raw milk intakes for processing. Demand for cheeses is stable in retail networks and from food industry enterprises. Export demand for American cheeses is stable and is held back by higher prices compared to previous periods. Cheesemakers from Oceania do not plan to either increase or decrease planned sales volumes over the next 12 months. Auction organizers expect that Cheddar cheese may depreciate by 2.3% in September, but appreciate by 4.9%, and Mozzarella cheese may appreciate by 6.5% in October.
Lactose appreciated to 1807 USD per ton (+3.2%). According to USDA data, demand for lactose remains high due to low warehouse stocks. Market participants are increasingly actively trying to secure deliveries for the fourth quarter. However, the supply of lactose in the spot market is limited. Some producers report that in the third quarter they no longer have additional volumes for deliveries in the spot market. According to the GDT forecast, lactose may appreciate by 3.2% in October.
Buttermilk powder depreciated to 4552 USD per ton (-3.5%). According to USDA data, demand for buttermilk powder is weak in export markets, and its production volumes are reducing, as processors prefer the production of other more profitable dairy products. Auction organizers expect that buttermilk powder may depreciate by 8.9% in September and by 2.5% in October.
The next GDT trading event will take place on September 1.
Press service of the Association of Milk Producers
Follow us on LinkedIn
Related News