Dairy Prices Soar in 2024: FAO Index Reflects Global Trends

Global Dairy Market Overview

The Food and Agriculture Organization (FAO) dairy price index recorded a decrease to an average of 138.9 points in December 2024, down 1.0 point (0.7%) from November. This decline marks the first after seven consecutive months of increases. Despite this drop, the index remained 20.2 points (17.0%) above its level from the previous year.

Butter Market Dynamics

International butter prices saw the most substantial decline, ending a streak of continuous increases over 14 months. This drop was attributed to weak global demand and accumulated stocks. Similarly, global cheese prices and skimmed milk powder prices also contracted due to lower international demand.

Contrasting Trends in Milk Powder

In contrast, whole milk powder prices rose, supported by price hikes in Oceania due to strong global demand, particularly from Asia, combined with reduced inventories in Western Europe resulting from seasonally low milk production.

Year-End Dairy Price Analysis

Throughout 2024, the FAO dairy price index averaged 129.6 points, 5.8 points (4.7%) more than in 2023. This increase was primarily driven by a significant rise in butter prices owing to high global demand and limited exportable supply due to erratic weather patterns affecting production.

Food Price Index Overview

The FAO food price index was recorded at 127.0 points in December 2024, 0.6 points (0.5%) less than in November. The drop was largely due to decreases in sugar, dairy products, vegetable oils, and cereal price indices, which offset the increase in meat prices. Overall, the index was 8.0 points (6.7%) above its level a year ago but remained 33.2 points (20.7%) below its March 2022 peak. For 2024, the index averaged 122.0 points, 2.6 points (2.1%) less than in 2023.