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World 05.01.2024

FAO Dairy Price Index Rises in December, Driven by Butter, WMP, and Cheese

Source: The DairyNews
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The Food and Agriculture Organization (FAO) reported a rise in the FAO Dairy Price Index, reaching an average of 116.1 points in December.
FAO Dairy Price Index Rises in December, Driven by Butter, WMP, and Cheese
This marks the third consecutive monthly increase, with a 1.9 point (1.6 percent) uptick from November. However, it still stands 22.2 points (16.1 percent) below the corresponding value from a year ago.

The December surge in the index was fueled by notable increases in price quotations for butter, whole milk powder (WMP), and cheese. International prices for butter and cheese experienced an upswing, primarily driven by robust internal sales in Western Europe leading up to the holiday season. This surge occurred despite a continued tight supply in the market, even as the region's milk deliveries rose seasonally.

Additionally, increased import demand from the Near East provided support to cheese price quotations. On the WMP front, strong global import demand led to price increases, while European markets remained relatively inactive due to holiday-related slowdowns. In contrast, skim milk powder prices on the world stage saw a slight decline, attributed to limited demand.

Reflecting on the entire year of 2023, the FAO Dairy Price Index averaged 118.8 points, witnessing a decrease of 23.6 points (16.6 percent) from the 2022 average. This decline was primarily influenced by lackluster import demand, particularly for spot supplies, amidst abundant stocks in importing countries. The overall trend reflected price decreases across all dairy products throughout the year.
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Professor of Agricultural and Resource Economics at the University of California
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February 2024
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