Global dairy prices fell in the latest auction overnight, signalling continued softness in the market. The average price at the auction dropped 1.6 percent to US$3,921 (NZ$6,760) per tonne, marking the lowest level for the Global Dairy Trade price index in a year.
This decline follows a 0.8 percent fall in the preceding auction and a 4.3 percent drop a month ago, highlighting a persistent downward trend. Whole milk powder, a key determinant of local farmer payouts, decreased 2.3 percent to US$3,696 per tonne. Other products also saw weaker prices, including butter (-3%), skim milk powder (-0.5%), and mozzarella (-11.8%). Conversely, prices for anhydrous milk fat and cheddar recorded modest gains.
NZX dairy analyst Rosalind Crickett attributed the soft results to strong global milk production. “Recent data from New Zealand, the US, the EU, and Argentina show robust year-on-year growth in both tonnage and milk solids,” Crickett noted. “This abundance of milk has naturally exerted downward pressure on milk powder prices.”
Crickett further observed that ample cream supplies have weighed on butter prices, with New Zealand butter facing increased competition from European and US products. Looking ahead, she suggested that lower prices may stimulate greater buying activity from international markets, particularly as seasonal stockpiling begins in anticipation of year-end and New Year festivities.
The auction underscores the impact of high global milk output on commodity prices, reflecting the delicate balance between supply dynamics and market demand in the international dairy sector.
