The price index is contracting for the second consecutive session. Uncertainty in export markets is holding back the growth of milk powder prices, according to Georghii Kukhaleishvili, an analyst at the Association of Milk Producers.
On Tuesday, June 3, the 381st GDT auction took place. The price index was 1311, having decreased by 22 points (-1.6%) since the previous auction. The average price for dairy products was USD 4332 per tonne, which is USD 257 less than the results of the previous trading session. During the auction, 16307 tonnes of exchange-traded goods were sold, which is 1113 tonnes more than the results of the last auction. The minimum offer was recorded at 15811 tonnes, and the maximum at 20117 tonnes. 166 dairy market operators participated in the trading, which is 11 fewer companies than on May 20.
According to the auction results, the price of anhydrous milk fat was USD 7373 per tonne, which is 1.4% higher than the previous trading session. The increase in price for this product may be related to the start of summer holidays, the tourist season, and growing demand for ice cream and sweets, in the production of which anhydrous milk fat is used as a cheaper alternative to butter. 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 Future Market Insights, the concentrated milk fat market could exceed USD 11.5 billion by 2035 with an 8.1% annual growth rate (CAGR). Fonterra and Dairy Farmers of America are expanding production capacities to meet the dairy fat needs of developed and developing countries. Auction organizers predict an increase in the price of anhydrous milk fat by 0.7% in July and 1.3% in August.
The price of butter at this auction was USD 7811 per tonne, which is almost equal to the results of the previous auction. According to the USDA, butter prices in the US are rising, given the reduction in cream supply in the west of the country and growing demand from butter manufacturers. As reported by Vesper, prices for American butter are lower than for European or New Zealand butter. Warehouse stocks of butter are lower than last year, and manufacturers are increasing production to replenish inventories. Demand for the product is quite active in supermarkets in the domestic market and in export markets. According to The Bullvine, export markets, particularly Mexico and Southeast Asia, are absorbing American butter faster than it can accumulate in warehouses. Demand from food processing companies is lower than in retail.
In Europe, there is also active demand for butter. According to Vesper, butter in the EU cost an average of €7000-€7100 per tonne in the last third of May, and cream prices increased due to the effect of rising air temperatures across Europe on the fat content of raw milk. As reported by The Bullvine, amid reduced milk yield in Europe, consumers from Asian countries are switching to American butter. In Oceania, less butter is produced due to seasonal reductions in milk yield, and demand for local manufacturers' products is quite active in export markets. Prices for butter from Oceania have decreased in the upper price range and are lower than the results of previous GDT auctions. According to the GDT organizers' forecast, butter prices may increase by 3.4% in July and 0.5% in August.
The price of whole milk powder was USD 4173 per tonne, a decrease of 3.7% compared to the results of the previous auction. According to the USDA, whole milk powder production in the US is limited outside of contractual obligations, and demand for the product in the spot market is insignificant. Export demand for the product from Europe and Oceania has slowed. Demand for the product from South America remains active in North Africa. According to FAO, in 2024, global trade in whole milk powder decreased by 1% to 2.5 million tonnes due to reduced imports from Vietnam, Brazil, China, and Algeria. This was partly offset by increased demand in Middle Eastern countries, particularly Saudi Arabia, UAE, Oman, and Iran.
The reduction in imports of whole milk powder by Brazil and China in 2024 is explained by increased domestic production and weak demand recovery. From May 2025, drinking milk in China can only be produced from raw milk. The Chinese government banned the reconstitution of drinking milk from milk powder to protect the interests of national producers amid an economic downturn, falling raw milk prices, deteriorating living standards in China, and reduced consumption of dairy products in the domestic market. According to the GDT forecast, a likely decrease in the price of whole milk powder by 2.8% in July and 3.1% in August.
Skimmed milk powder decreased to USD 2807 per tonne (-1.1%). According to the USDA, in the US, skimmed milk powder prices are rising due to limited warehouse stocks of the product and increased demand from Mexico. From Brazil and Algeria, there is stable import demand for skimmed milk powder produced in Argentina and Uruguay. Demand for the product is active in Oceania amid seasonal reductions in milk production, but has slowed in export markets. In Europe, demand for skimmed milk powder is stable, and product prices have slowed.
According to FAO, in 2024, global trade in skimmed milk powder amounted to 2.6 million tonnes, which is 0.5% less than in 2023, mainly due to reduced imports from China and Mexico. In China, demand fell due to weak domestic consumption in the foodservice sector and significant domestic stocks, while Mexico increased imports of more expensive dairy products such as cheese and butter. In contrast, in 2024, imports of skimmed milk powder increased in Southeast Asia, including the Philippines, Indonesia, and Malaysia, due to increased demand influenced by government food security programs and the food industry.
Increased exports of the product from Australia, Turkey, Iran, and Uruguay partially offset reduced supplies from the US, EU, UK, and New Zealand. Due to falling demand in China, North African, and Middle Eastern countries, competition among exporters in North African markets, such as Algeria and Egypt, has intensified. Auction organizers expect a decrease in the price of skimmed milk powder by 0.5% in July and 0.7% in August.
Cheddar cheese decreased to USD 4759 per tonne (-4.2%), while Mozzarella cheese increased to USD 4897 per tonne (+2.3%). According to the USDA, in the US, cheese production is increasing, and warehouse stocks are growing. The start of summer holidays in schools contributed to a reduction in demand for drinking milk and an increase in raw milk receipts for cheesemakers. Demand for American cheeses has become more active in the domestic and export markets. In Southern European countries, demand for cheeses is growing with the start of the tourist season, but increased production volumes are limited by lower milk yields compared to the same period last year. In mid-May, demand for Cheddar from Oceania in export markets was sluggish due to higher prices than GDT auction prices. Most likely, cheese prices are being pushed up by reduced production volumes amid seasonal reductions in milk yield in Oceania. New Zealand is negotiating a free trade agreement with India to supply premium dairy products to the Indian market.
As reported by FAO, in 2024, global cheese trade grew to 3.7 million tonnes, which is 2.5% more than in 2023, mainly due to increased imports from Mexico, the US, Brazil, the UK, Saudi Arabia, and Japan. In the US and the UK, demand for high-quality European cheese increased, and in Japan, imports partially recovered after a decline, due to demand from restaurants, hotels, and public institutions. At the same time, cheese imports decreased in Iraq, South Korea, Australia, and China due to increased domestic production or weak purchasing power of the population. Cheese exports increased in the US, Australia, and Argentina, partly due to their competitiveness in Southeast Asian and MENA markets.
Cheese exports from the EU decreased due to increased competition with local producers in developing countries' markets, uneven milk production in various regions caused by unfavorable weather conditions in the first half of 2024. The trade war of US President Donald Trump's administration and increased tariffs on European dairy products create preconditions for complicating European cheesemakers' access to the American market. Until recently, the US imported large volumes of cheeses from France, Italy, and Ireland. European dairy processing enterprises may not be able to quickly reorient the export directions of their products, which may put downward pressure on prices. Auction organizers assume that Cheddar cheese may increase by 2% in July, but decrease by 2.5% in August. The price of Mozzarella cheese is predicted to increase by 2.6% in August.
Lactose decreased to USD 1371 per tonne (-2%). As reported by the USDA, lactose prices increased in the US due to stable demand and limited product stocks in the domestic market. As reported by Vesper, in the last third of May, lactose prices in Europe remained stable at €1350/tonne, which is almost double the American price of €739/tonne. A temporary reduction in tariffs on American products by China creates short-term market clarity, but long-term forecasts largely depend on the course of negotiations between the US and China. European suppliers should prepare for potential price pressure due to increasing competition from the US during the 90-day period. Auction organizers predict a decrease in the price of the product by 2% in August.
Buttermilk powder decreased to USD 2834 per tonne (-6.1%). According to the USDA, last week, buttermilk powder prices in the US were relatively stable, although the upper limit of the price range increased slightly. Buttermilk stocks were sufficient due to active work by butter producers, ensuring a stable supply of raw materials for drying. Demand for the product in the American market has increased, and remains stable in export markets. Auction organizers predict a decrease in the price of the product by 10.4% in July and 3.5% in August.
The next GDT auction will take place on June 17.