Page 24 - Dairy Dimension - July Aug 25

| Volume 1 | Issue 5 | July-Agu 2025 GLOBAL NEWS

Fonterra Raises Milk Price FAO Dairy Price Index Holds Italy–U.S. Dispute over

Forecast Flat in July Cheese Tariffs

Fonterra, New Zealand's largest dairy cooperative, has The FAO Dairy Price Index averaged 152.6 points in Italy has lodged complaints with U.S. customs authorities
revised its 2024/25 farmgate milk price forecast, lifting August 2025, easing 1.3% from July and extending its after reports that Parmigiano Reggiano and Grana
the midpoint from NZ$10.00 to NZ$10.15 per kilogram downward trend for a second month. Despite this Padano shipments were being charged tariffs higher
of milk solids (kgMS). The range was narrowed to softening, the index still stands 16.2% above its August than the 15% agreed under the new EU–U.S. trade
NZ$9.75–10.55, signalling greater confidence in market 2024 level, underscoring the broader tightness in global framework. Italian dairy associations have warned that
stability. The upward revision reflects steady global dairy dairy markets. The decline was mainly driven by lower the discrepancy risks eroding margins and damaging
prices, strong demand from Asia, and a solid sales book quotations for butter, cheese, and whole milk powder, competitiveness in the lucrative American market, where
for powders and fats. For New Zealand farmers, the as robust production in New Zealand and the European premium Italian cheeses enjoy strong demand. The issue
change translates into improved cash flow, particularly Union coincided with muted import demand from key comes just weeks after Brussels and Washington
crucial during a year of high input costs. For global Asian buyers, particularly in China and Southeast Asia. announced progress toward easing agri-food trade NEWS
buyers, however, higher farmgate prices may reinforce However, the downward pull was partly cushioned by tensions. Italy is pushing for enforcement of agreed tariff
already firm Oceania benchmarks, affecting import- firmer skim milk powder (SMP) values, reflecting terms, highlighting sensitivities around origin-linked
dependent countries. The forecast also sets expectations constrained availability in New Zealand. This divergence cheeses, which are vital to the country's export
for milk supply recovery after a challenging previous within product categories points to a market balancing economy. For dairy professionals, this development
season. For dairy professionals, Fonterra's pricing signals act: strong supply-side performance in traditional underscores how tariff administration, not just headline
remain a barometer for global commodity sentiment. exporters is weighing on fat- and protein-rich dairy agreements, can create uncertainty. U.S. importers may
The revised forecast suggests that while volatility commodities, while selective tightness in powders hesitate to place large orders amid ambiguity, and Italian
persists, demand from Asia and the Middle East signals continued vulnerability to supply disruptions and exporters face potential short-term disruptions. The
dispute illustrates the fragility of transatlantic trade
continues to underpin markets, providing relative shifting demand patterns. frameworks and the importance of vigilance in
stability compared to recent years. France Containment of monitoring customs enforcement, especially for high-
China Extends Anti-Subsidy Lumpy Skin Disease value dairy categories where margins are already GLOBAL

Probe into EU Dairy France has successfully contained a recent outbreak of squeezed by rising input costs.
EU–U.S. “Fair and Balanced”
China has extended its anti-subsidy investigation into lumpy skin disease (LSD), reporting zero new cases after
European Union dairy imports — covering cheese, milk, August 22 thanks to mass vaccination efforts. Earlier in Trade Framework Advances
and cream — until February 2026. The investigation, the summer, LSD cases disrupted cattle movement, The EU and U.S. have announced progress on a
launched in 2024 amid broader EU–China trade tensions, raising alarms for raw-milk cheese producers and framework for “reciprocal, fair and balanced” trade, with
now prolongs uncertainty for exporters in France, livestock exporters. The rapid containment is being provisions set to extend most-favoured nation (MFN)
Ireland, and the Netherlands. EU dairy companies fear hailed as a success for coordinated veterinary treatment to certain dairy categories beginning
potential countervailing duties that could erode intervention and EU-level support. For French dairy, the September 1. The framework aims to reduce disputes
competitiveness in China, one of the world's largest immediate relief is significant: LSD outbreaks risk not and stabilise trade relations, but agricultural carve-outs
growth markets for cheese and premium dairy. The only livestock health but also France's reputation as a remain politically sensitive. Dairy is particularly
extension underscores how trade disputes in sectors like premium dairy exporter. The episode, however, contentious: the U.S. seeks expanded access for cheese,
electric vehicles are spilling into agri-food. For European highlights ongoing vulnerabilities in Europe to while the EU is protective of its geographical indications
producers already grappling with flat domestic demand, transboundary animal diseases, especially amid climate- (GIs). While headline progress is welcome, details remain
China remains a critical growth outlet. The delay, linked shifts in vector patterns. For dairy professionals, limited, leaving exporters uncertain about the exact
however, hampers forward contract negotiations and the incident reinforces the economic stakes of animal scope of benefits. For dairy professionals, the framework
supply chain planning. For dairy professionals, the health. A few weeks of disruption threatened PDO offers both opportunities and risks. On the one hand,
episode illustrates how trade politics increasingly shape (protected designation of origin) cheese exports and reduced tariff barriers could expand market access for
dairy markets. Exporters must prepare for scenarios of raised questions about compensation frameworks for certain EU dairy products. On the other, unresolved
restricted Chinese access and diversify markets in Asia- farmers. With international markets increasingly disputes over GI protections and tariff-rate quotas mean
Pacific and the Middle East. Equally, it reflects China's sensitive to disease risk, the French case demonstrates trade frictions could flare up again. The framework For latest news
growing use of trade instruments to protect domestic how fast and coordinated veterinary responses can should be seen as a step toward stabilisation, but not a scan here
industries and assert leverage in negotiations with preserve both production and trade credibility. resolution. Exporters on both sides must remain
Brussels. cautious in long-term planning until the final
implementation details are clearer.

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