Market Takes The Scenic Route
ANZ agri economist Matt Dilly looks at the impressive run of global dairy prices this year.
The GDT price index recorded its ninth consecutive decline, confirming a glut in global milk supply.
The overnight auction saw the GDT price index falling 4.4% compared to the previous event. Whole milk powder price, which largely determines the farmgate milk price paid to farmers, fell 5.7% to US$3161/metric tonne, at its lowest point since August 2024. Just over six months ago, WMP price was hovering around US$4374/MT.
NZX head of dairy Cristina Alvarado says last night’s auction delivered a more bearish outcome than expected.
“This ninth consecutive decline reflects persistent supply-side pressure in global dairy markets, as milk availability continues to run high across several key producing regions,” she says.
“Strong milk production in the United States and Europe, alongside continued output from Argentina, has maintained ample exportable supply.
“In addition, China reported a second consecutive month of year-on-year growth in milk production in its latest data release, with October milk production up 2.1%, further reinforcing the perception of plentiful global supply.”
She adds that the presence of abundant product availability limited buyers’ urgency, particularly amid ongoing competition from alternative origins.
Milkfat markets also came under pressure. AMF prices fell -5.2% to an average of US$5,602/MT. Butter prices declined by -2.5%, a smaller drop than anticipated, with demand proving comparatively more resilient.
Cheddar prices were unchanged, while Mozzarella and Lactose recorded gains, reflecting more product-specific dynamics and smaller volumes on offer. Regionally, North Asia accounted for 58% of total purchases, up from 50% at the previous event, helping to prevent a deeper overall decline. However, reduced participation from the Middle East, which lowered its share to 11% from 19% previously, reinforced the softer tone of the auction.
Alvarado says overall, last night’s GDT auction highlighted that ongoing strength in global milk production continues to weigh on prices, with buyers showing limited urgency in an environment of sustained supply abundance.
“Seasonal factors approaching year-end also appeared to be reflected in softer demand at the final GDT event of December,” she says.
