Global Dairy Prices Drop 5% Amid Supply Surge

Average prices at the latest Global Dairy Trade auction fell by approximately 5% to US$3,793 per tonne, marking the largest decline in two years and the third price drop since May 19. The slump follows a 2.8% decrease at the previous auction nearly a month prior.

Global Dairy Trade Holdings Limited reported that cheddar experienced the steepest decline, falling 12.3% to US$3,900 per tonne. Other products seeing decreases included skim milk powder by 7%, butter by 5%, and anhydrous milk fat by nearly 4%. Conversely, mozzarella prices rose by 3.8% and buttermilk powder increased by 8.2%. Nearly 150 bidders competed for 26,300 tonnes of products during the July 7 auction.

The price decline is driven by weaker global demand and a surge in supply, specifically from Fonterra's seasonal volume increases. Volumes for whole milk powder and skim milk powder rose nearly 20% compared to the same event last year. While production grew in most major regions, China's production decreased by 4.6% year-on-year. Analysts suggest that future production may be hindered by El Niño conditions in the tropical Pacific and heatwaves in Belgium and France.