The price increase for almost all exchange-traded goods may be related to preparations for the vacation season and summer holidays, when ice cream consumption and the number of visitors to public catering establishments increase. Reduced milk production in Oceania and Europe, geopolitical factors, and changes in China's regulatory policy are influencing the redistribution of export flows and increasing competition in sales markets, according to Georghii Kukhaleishvili, an analyst at the Association of Milk Producers of Ukraine.
On Tuesday, May 6, the 379th GDT trading session took place, the results of which showed the price index at 1344, an increase of 59 points (+4.6%) since the previous auction. The average price for dairy products was USD 4516 per tonne, which is USD 131 more than the results of the previous trading session. During the trading, 16714 tonnes of exchange-traded goods were sold, which is 4 tonnes less than the results of the last auction. The minimum offer was recorded at 15881 tonnes, and the maximum at 20285 tonnes. 175 dairy market operators participated in the trading, which is 6 more companies compared to April 15.
According to the trading results, the price of anhydrous milk fat was USD 7212 per tonne, which is 5.4% more than the previous trading session. According to the Food Production Solutions Association, anhydrous milk fat may enjoy sufficient demand in developing country markets due to its more affordable price compared to butter. According to IMARC Group, the global anhydrous milk fat market reached USD 3.1 billion in 2024. IMARC Group forecasts that the market volume may increase to USD 5.3 billion by 2033, which would mean an annual growth of 6.2% in the period from 2025 to 2033.
The main drivers of this growth are the popularity of dairy diets, the increasing number of fast-food restaurants, cafes, and hotels serving dishes using dairy products, as well as the growing popularity of fusion food among the general population. According to Future Market Insights, Fonterra and Dairy Farmers of America are expanding their production capacities to meet the dairy fat needs of developed and developing countries.
However, the US trade war against Mexico complicates the situation in the global anhydrous milk fat market. According to Dairy News Today, Mexico imports this product from New Zealand for further re-export to the United States. After the introduction of 25% tariffs on goods from Mexico and Canada by US President Donald Trump's administration, doubts arose about further supplies of anhydrous milk fat to America. The loss of access to the American market may restrain demand for the product. Mexico buys about 10% of the anhydrous milk fat produced by New Zealand. According to an OCER forecast, American tariffs could lead to an economic downturn in Mexico, which is likely to negatively affect the demand for dairy products in the country's domestic market. Auction organizers predict an increase in the price of anhydrous milk fat by 5.3% in June and by 5.9% in July.
The price of butter at this trading session was USD 7992 per tonne, which is 3.8% more compared to the results of the previous auction. According to the USDA, there is a stable supply of cream in the US domestic market, which allows dairy processing enterprises to maintain active butter production. Domestic demand for butter is stable, while international sales stimulate additional production. In the Central region, demand for cream from ice cream producers has increased, which has partially reduced the supply of raw materials for butter producers.
In Western Europe, butter prices have risen, but the increase in the volume of product production is restraining high demand for milk fat from other segments. Despite the fact that the volume of cream has increased due to the seasonal increase in milk yield, butter stocks do not meet producers' expectations. Buyers are in no hurry to conclude large or long-term contracts due to market uncertainty. The strengthening of the euro does not contribute to the competitiveness of European butter in export markets.
In Oceania, butter prices have risen across the board, which is associated with a seasonal decrease in raw milk production and a reduction in butter production volumes in the region. Retail sales of butter in the region remain steadily high, while sales in the catering sector are weak. Butter stocks in Oceania are decreasing. According to the GDT organizers' forecast, butter prices may increase by 2.8% in June and by 3.2% in July.
The price of whole milk powder was USD 4374 per tonne and increased by 6.2% compared to the results of the previous trading session. According to the USDA, in Oceania, prices for the product rose across all contracts, reaching the highest level since April 2022. Demand for whole milk powder in the spot market in the US was low, and in the EU it slowed down during the spring holiday period. However, despite the increase in raw milk supply in the US and Europe, the production of whole milk powder is limited only to the fulfillment of contractual obligations, and demand for the product is restrained. The strengthening of the euro reduces the competitiveness of European products in foreign markets. Whole milk powder produced in South America is of interest to buyers from Brazil and Algeria.
The introduction by the Chinese government of a ban on the reconstitution of milk powder into drinking milk may contribute to a reduction in global demand for whole milk powder. From May 2025, drinking milk in China can only be produced from raw milk. The Chinese government took these measures to protect the interests of national producers in the context of an economic slowdown, a deterioration in living standards in China, and a reduction in the consumption of dairy products in the domestic market. These changes are a challenge for exporters of milk powder, as until recently China was a key sales market for the product. Such large exporters of milk powder as New Zealand and the EU have to change the directions of their product supplies, which will intensify competition in other sales markets. According to the GDT forecast, a likely increase in the price of whole milk powder by 7.3% in June and by 8.5% in July.
Skimmed milk powder rose slightly to USD 2828 per tonne (+0.5%). According to the USDA, skimmed milk powder is getting cheaper in the US, and product stocks meet market needs. According to the USDA, demand for skimmed milk powder remains stable in the US domestic market. In export markets, interest in American goods is restrained, particularly in Mexico amid the trade war. In Western Europe, demand for the product has decreased somewhat during the spring holidays.
The strengthening of the euro makes European skimmed milk powder less competitive in export markets. Certain customers are interested in concluding contracts for the supply of goods for the third and fourth quarters. In export markets, there is interest in skimmed milk powder from producers in Oceania, Uruguay, and Argentina. Importers from Brazil and Algeria are actively purchasing products to replenish stocks after the first quarter. Auction organizers expect a decrease in the price of skimmed milk powder by 2.5% in June, but forecast an increase of 1% in July.
Cheddar cheese rose to USD 5519 per tonne (+12%), but the price of Mozzarella cheese decreased to USD 4752 per tonne (-0.3%). According to the USDA, the increase in the supply of raw milk in the US contributes to the active production of cheeses, especially those types used in pizza preparation. Demand for cheeses remains active, and product stocks have decreased somewhat due to stable sales. Demand for cheese varies from stable to strong. Demand for cheeses from public catering establishments is not as active as in retail trade. Demand in export markets remains competitive.
In the EU, demand for cheeses is stable in retail chains and from restaurants, although the expected increase in sales after Easter did not occur. In Southern Europe, demand is traditionally strong, but cheese stocks are being formed in smaller volumes than last year. Export activity remains mixed, despite the fact that supply and demand are generally balanced. Some producers are experiencing a limited amount of finished products. Milk production in the EU was growing and approaching its seasonal peak, but the reduction in the number of cows in 2024 negatively affects the availability of raw milk in 2025.
The US trade war creates risks for European cheesemakers. The US has traditionally imported large volumes of cheeses from France, Italy, and Ireland. European dairy processing enterprises are unlikely to quickly reorient the export directions of their products, and the accumulation of unsold exchange-traded goods in warehouses will put pressure on prices.
In Oceania, cheese prices have fallen, despite stable retail demand. Sales to the restaurant business are declining, while demand in export markets remains stable. Due to the seasonal decline in milk yield, cheesemakers lack milk. Auction organizers assume that Cheddar cheese may rise in price by 12.7% in June and by 13.2% in July. The price of Mozzarella cheese is forecast to increase by 0.1% in July.
Lactose rose to USD 1611 per tonne (+16.8%). As reported by the USDA, citing American producers, large particle size lactose is less available on the market than smaller particle size lactose. According to RaboResearch, China struck the US in the trade war by imposing a 34% tariff on imports of American lactose. The blow fell on the most vulnerable segment of American agricultural exports — dairy ingredients, more than half of which the US supplies to foreign markets, and where China is the largest buyer. According to Stellar Market Research, lactose is actively used as a sweetener and texturizer in baking, baby food, sports and functional nutrition, as well as in veterinary medicine.
In 2024, the US exported 409 thousand tonnes of lactose — 58% of the global volume. China bought almost 110 thousand tonnes of American lactose, which is 72% of its imports. However, after the introduction of new tariffs, these volumes are expected to decrease sharply. Against this background, the EU may gain a unique window of opportunity. According to RaboResearch, in 2024, the EU exported 274 thousand tonnes of lactose, of which 33 thousand tonnes went to China. In theory, European producers could cover part of the volumes that the US will lose. However, there is a nuance — European products are significantly more expensive. Even taking into account the new tariffs, the US retains a price advantage. Auction organizers predict an increase in the price of the product by 16.8% in July.
Buttermilk powder rose to USD 3060 per tonne (+6.2%). According to the USDA, demand for buttermilk powder has somewhat revived in export markets. In particular, there is an increase in contract purchases for the second and third quarters. Despite active production and growing inventories, some producers note a certain limited availability of free volumes for spot buyers, although overall the supply of the product meets both contractual and one-off orders. Auction organizers predict an increase in the price of the product by 4.9% in July.
The next GDT trading session will take place on May 20.
Press Service of the Association of Milk Producers
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