Global Farmgate Prices Surge, Led by Strong Butter Demand: Rabobank
Source: DairyNews.today
Farmgate prices for milk are hitting record highs globally, averaging around $0.50 per liter, according to Rabobank’s latest insights.
During a recent webinar, Mary Ledman, Rabobank’s global dairy analyst, highlighted how robust domestic demand in key markets like Europe and the United States is driving up butter prices, subsequently attracting milk into butterfat production.
“US prices are slightly lower than others, but butter stands out, propelled by strong demand,” Ledman said.
Farmers in New Zealand are poised for historic highs in farmgate prices, with expectations for improved margins and further gains in 2025. Similarly, Europe and the US have aligned with this pricing trend, though dynamics in China diverge significantly.
For the first time, Chinese milk prices are lagging behind the global average due to competitive domestic production. “China’s local milk is currently priced below the world market, which might temper the country’s production growth momentum,” Ledman observed.
Global Production Set for Modest Growth
Rabobank forecasts a 0.8% rise in milk production for 2025 among major global producers, approaching the peak output seen in 2021. Europe leads global dairy trade, contributing 33% of the total 160 million metric tonnes it produces annually. New Zealand follows with a 25% share, while the US accounts for 15% and South America exceeds 5%.
“Global trade should see positive growth in 2025 as production expands across the board,” Ledman said.
US Recovery and Profitability
In the United States, dairy production has returned to growth after a weak prior year, with a projected 0.9% increase in 2025. Lucas Fuess, Rabobank’s North American dairy analyst, attributed much of the growth to recovery in the Midwest, even as West Coast states like California experienced declines, including a nearly 4% drop in October due to the avian flu outbreak.
“Farmer margins have reached multi-year highs,” Fuess noted, citing a combination of strong milk prices and three-to-four-year lows in feed costs. “2025 is shaping up to be a solid year for US dairy farmer profitability.”
The outlook for the global dairy market remains optimistic, driven by strong demand, favorable pricing, and steady production growth. Rabobank analysts expect these trends to underpin the sector’s momentum into 2025.
“US prices are slightly lower than others, but butter stands out, propelled by strong demand,” Ledman said.
Farmers in New Zealand are poised for historic highs in farmgate prices, with expectations for improved margins and further gains in 2025. Similarly, Europe and the US have aligned with this pricing trend, though dynamics in China diverge significantly.
For the first time, Chinese milk prices are lagging behind the global average due to competitive domestic production. “China’s local milk is currently priced below the world market, which might temper the country’s production growth momentum,” Ledman observed.
Global Production Set for Modest Growth
Rabobank forecasts a 0.8% rise in milk production for 2025 among major global producers, approaching the peak output seen in 2021. Europe leads global dairy trade, contributing 33% of the total 160 million metric tonnes it produces annually. New Zealand follows with a 25% share, while the US accounts for 15% and South America exceeds 5%.
“Global trade should see positive growth in 2025 as production expands across the board,” Ledman said.
US Recovery and Profitability
In the United States, dairy production has returned to growth after a weak prior year, with a projected 0.9% increase in 2025. Lucas Fuess, Rabobank’s North American dairy analyst, attributed much of the growth to recovery in the Midwest, even as West Coast states like California experienced declines, including a nearly 4% drop in October due to the avian flu outbreak.
“Farmer margins have reached multi-year highs,” Fuess noted, citing a combination of strong milk prices and three-to-four-year lows in feed costs. “2025 is shaping up to be a solid year for US dairy farmer profitability.”
The outlook for the global dairy market remains optimistic, driven by strong demand, favorable pricing, and steady production growth. Rabobank analysts expect these trends to underpin the sector’s momentum into 2025.
