Skim Milk Powder Lifted the Global Dairy Trade Index
Skim milk powder (SMP) recorded the largest gain among the main products in the latest Global Dairy Trade auction. Its price increased across every contract period, following a 7.6% rise at the preceding event. The SMP index reached $3,665 per tonne, its highest level since September 2022.
The result placed SMP $110 per tonne above whole milk powder (WMP), which was priced at $3,555. WMP contains both milk protein and milkfat and would generally be expected to sell at a premium to SMP. The latest auction instead showed stronger demand for milk protein than for products centred on milkfat.
The wider GDT price index rose by 0.9%, despite higher seasonal milk availability in several major producing regions. Cristina Alvarado, head of dairy insights at NZX, said the auction had produced a more resilient result than might have been expected given the increase in supply. She said demand for milk powders remained firm, while the fall in milkfat prices was less severe than at the previous auction.
Milkfat and cheese prices declined
Performance differed across the other principal dairy commodities. Anhydrous milk fat fell by 1.3%, butter declined by 0.8%, and whole milk powder edged down by 0.1%. Cheddar recorded the sharpest decrease, at 6.6%.
The contrasting movements came as production expanded in New Zealand, Australia, Europe and the United States. The August Global Dairy Update reported increased milk output in each of those regions during May, June and July. The supply increase coincided with continued support for milk-powder prices, while milkfat products remained weaker and cheese faced a larger supply burden.
Milk proteins are used in food, drinks and nutrition products. Differences in the prices of protein, fat and cheese components affect the relative value of milk for processors and farmers, as well as processing margins and production decisions, according to the source. The next GDT event is scheduled for September 14–15. Fonterra is due to publish its annual results on September 24, including an update on its farmgate milk-price forecast for the current season.
