Markets resilient, farmers hopeful

New Zealand’s dairy sector is buoyed by strong demand signals and supportive futures pricing, with the NZX milk price calculator now backing forecasting a farmgate milk price of NZ$10.39/ kgMS for the 2025/26 season.

This reflects growing confidence in demand for New Zealand product, however with strong supply heading into spring, farmers are remaining cautious on where milk price will land for the season.

The latest Global Dairy Trade (GDT) Event 385 (August 5th) recorded mixed results across commodities, with the overall index ticking up 0.7%, broadly in line with expectations. The standout performer was whole milk powder (WMP), which rose 2.1%, driven by momentum from two successive increases at GDT Pulse auctions during the extended break since the previous Trading Event.

While the headline result aligned closely with SGX-NZX Derivatives expectations, a deeper look at the futures curve reveals a slightly more bullish outcome. The C2 regular product settlement price increased 4.1%, or $70/tonne higher than futures had predicted, breaking through the US$4,000/tonne barrier. Contracts for C3–C5 also showed strength, all settling above US$3,950/ tonne.

Regionally, North Asia claimed 49% of WMP product, continuing its dominant purchasing role. Chinese inventories of WMP were up 19% month-on-month in June, but down 63% yearon- year, a bullish signal indicating that inventory has needed some replenishment over the past month.

Despite WMP volumes increasing significantly over peak period on GDT prices continue to show resilience.

Read More:

• BNZ lifts milk price forecast to $10.25/kgMS for 2025-26
• DairyNZ chair defends butter prices amid global demand
• NZ milk production surges 17.8% at start of 2025/26 dairy season

A potential bearish counterweight is increased New Zealand supply.

Fonterra recorded a +43% year-on-year increase in South Island milk collections for June, although this data point falls at the seasonal low, and its impact may be muted in the short term.

powder (SMP) and butter fell in line with futures expectations, with the front C1 contract for SMP being the only major surprise to the upside, suggesting product was needed quickly. However, anhydrous milk fat (AMF) slightly exceeded predictions, with a +1.8% increase for C2 premium grade.

Butter continues to correct from its earlier record highs, with minimal regional buying interest outside of North Asia, who absorbed 67% of product. While China remains the top destination for 36% of New Zealand’s butter exports year-to-date, Saudi Arabia has emerged as the second- largest destination, with exports up 35% compared to +10% for China.

However, Middle Eastern demand has softened recently, with the region taking just 5% of butter product in the past two events.

James Atkinson

Approximately 20-25% of NZ milk is being managed via hedging tools, with more dairy farmers and processors looking to manage their risk profile.

In a volatile world where milk price, milk production and on-farm costs are fluid SGX-NZX milk futures and options can provide a way to manage this volatility.

Since the launch of SGX-NZX Milk Price Futures and Options, there’s been growth in the wider eco-system of milk price risk management tools available to farmers such as processor fixed price offerings, and bank swaps, which provide farmers with more choice.

With New Zealand dairy farmers well into the calving period, global sentiment remains cautiously optimistic. Strong futures pricing, stable powder markets, and robust export demand— particularly from China and Southeast Asia, creating a price supportive environment.

The NZX Team will also be hosting the SGX-NZX Global Dairy Seminar in October in Singapore, bringing together international stakeholders to discuss market developments and share perspectives. If you want further information about the event, NZX insights or using derivatives in your business – feel free to reach out to the team at This email address is being protected from spambots. You need JavaScript enabled to view it..

James Atkinson is manager - derivatives sales at NZX and Cristina Alvarado is head of Dairy Insights at NZX. Her team offers a suite of reports that provide deep insights into market movements, and has over 6000 subscribers across 25 countries, reflecting the global interest in New Zealand’s dairy data and forecasting.