Global dairy quotations rise as milk-powder demand firms
Renewed buying by importers in Asia, including regular purchases in South-East Asia and a gradual recovery in China, has accompanied continued tenders in the Middle East and North Africa. Buyers are rebuilding inventories and securing operating cover for the coming months, when global supplies are expected to be tighter. This has increased premiums on forward contracts.
Major exporting regions—including the European Union, the United States, Oceania and the Southern Cone—are reporting contained levels of primary milk production. Weather constraints, European environmental rules, and higher feed and energy costs have limited the expansion of dairy herds. The supply position has prevented the accumulation of large surpluses and strengthened the negotiating position of drying plants in international markets.
Whole milk powder has been the main source of momentum within the dairy-products complex, alongside skimmed milk powder. Recent trading sessions on Global Dairy Trade and quotations in leading wholesale centres have recorded a sustained upward movement in powder values, with the firmer market also extending to butterfat products and cheeses.
For South American dairy processors, higher whole-milk-powder quotations have improved the conditions for export sales. Stronger free-on-board prices provide companies with increased dollar liquidity and allow seasonal surpluses of fluid milk to be channelled into export processing. The same outlet can reduce pressure on mass-consumption markets in the region when seasonal milk availability rises.
The firmer international market has also improved the margins available to exporters of dairy commodities. Sector specialists, however, said the durability of the current strength would depend on global macroeconomic stability, exchange-rate movements and the ability of processors to pass improved export prices through to payments made to milk producers at the farm gate.
The latest movement follows a period in which import demand had regained momentum while exportable supply remained constrained. The resulting price increases have been reflected in both benchmark trading platforms and wholesale markets, with the most recent activity indicating continued interest in milk powders from strategic importing destinations.
