Global dairy markets establish firmer footing amid production uncertainty

Milk supply expanded across several important exporting regions during the middle months of the year. June collections rose by 2.3% in the United States, 1.6% in Argentina and 11.6% in Uruguay. Australia recorded a 5.4% increase in collections in May.

China moved in the opposite direction. Domestic milk production there fell by 5.8% year on year in June. The supply figures indicated continued availability in international markets, while weather concerns were reported for the later part of the production season.

Possible El Niño conditions and heatwaves in the northern hemisphere were identified as risks to the durability of output later in the year. The data did not indicate that these risks had already changed production, but they were included among factors being monitored in global dairy markets.

Recent Global Dairy Trade auctions and Pulse events showed different price movements among dairy products. Overall GDT indicators changed little, while whole milk powder and skim milk powder prices increased. New Zealand medium-heat skim milk powder gained 5.5% across successive trading sessions.

Butter and anhydrous milk fat prices declined modestly during the same period. Procurement teams were securing powder volumes for the fourth quarter, while the movement in dairy-fat prices reflected different purchasing priorities among buyers.

New Zealand’s dairy exports rose 16.5% year on year in June. Shipments of skim milk powder, cheese, butter and infant formula supported the increase, offsetting weaker demand from mainland China for whole milk powder.

Buyers from North Asia represented 38% of purchases at recent GDT events. Their buying was linked to supplies intended for delivery in October and November, according to the trade figures.