Global Milk Avalanche: Why Dairy Prices Keep Sinking Despite Firm Exports

With New Zealand noting a 2.5% year-on-year increase in milk production in August, and a 4.2% season-to-date increase, supply remains high. Similarly, the United States reported a 3.2% YoY increase, while Argentina and Uruguay experienced even sharper rises of 9.8% and 3.0%, respectively. The European Union marked a smaller gain of 0.6% YoY. This global supply overhang keeps prices in check despite strong demand fr om regions like Asia and the Middle East.

Notably, New Zealand's export volume saw a rise of 17.6% YoY in August, with the value up 32.6%. However, abundant global supply still overshadows any recovery in international demand, affecting prices at key auction events like Global Dairy Trade (GDT), wh ere prices recently fell by 1.6%, dipping below the US$4000/tonne mark.

Ample global supplies mean that even though there are signs of opportunistic buying, particularly from North Asian buyers, which increased by 31%, the risk of price downturns continues to loom, putting pressure on dairy farmer margins as the Southern Hemisphere approaches peak milk seasons.