The latest Global Dairy Trade (GDT) auction delivered a significant 3.7% increase in the price index, catching bearish traders off guard. With powders leading the surge and butter prices showing regional inconsistencies, the key question remains: Will EU dairy prices follow suit, or will they continue their independent trajectory?
Breakdown of Product Price Movements and Market Context
| Product | Price Index Change | GDT Average Price (USD/MT) | GDT Average Price (EUR/MT) | Market Commentary |
|---|---|---|---|---|
| Anhydrous Milkfat (AMF) | +2.4% | $6,766 | €6,585 | NZ AMF demand is near peak levels from June 2024. EU AMF remains weak. |
| Butter | +3.4% | $7,222 | €7,029 | GDT gains contrast with EU butter prices, which slipped €100 lower due to weaker cream. |
| Buttermilk Powder | -0.4% | $3,092 | €3,009 | Minimal change, reflecting stable but unexciting demand. |
| Cheddar Cheese | +3.7% | $5,025 | €4,891 | Mildly bullish, but cheese remains range-bound with weak momentum. |
| Lactose | +17.7% | $1,050 | €1,022 | Strongest performer, likely driven by pharma and food industry demand. |
| Mozzarella | -0.1% | $4,157 | €4,046 | Flat performance, confirming stagnant cheese market trends. |
| Skim Milk Powder (SMP) | +4.7% | $2,835 | €2,759 | EU SMP saw prices up to €2,600, while NZ SMP remains at €2,900. |
| Whole Milk Powder (WMP) | +4.1% | $4,169 | €4,058 | EU WMP traded between €4,250 and €4,300, while NZ WMP lagged at €4,000. |
Key Takeaways from GDT 373
Powders Lead the Market Surge
Once again, Skim Milk Powder (SMP) and Whole Milk Powder (WMP) took center stage, reinforcing strong global demand.
- SMP rose 4.7%, with EU prices climbing to €2,600 (Solarec), while NZ SMP remained higher at €2,900.
- WMP gained 4.1%, with EU product trading at €4,250–€4,300, whereas NZ WMP remained at €4,000.
💡 Market Opportunity: EU powder prices remain competitive against NZ-origin products, creating an opportunity for European producers to expand exports and increase market share.
Butter Prices Diverge Between Regions
While GDT butter prices increased by 3.5%, EU butter continued to weaken, primarily due to softening cream prices.
- EU butter prices fell by ~€100 compared to the previous auction.
- February butter traded between €7,025 and €7,200, with Q2 prices dipping to €6,900.
- EEX butter futures showed steady declines, reflecting ongoing market softness.
💡 Looking Ahead: If NZ butter demand sustains high levels, GDT’s strength could eventually lift EU prices. However, unless cream prices stabilize, EU butter may continue to struggle.
Cheese Market Faces Continued Uncertainty
The cheese sector remains locked in a bid-offer deadlock. While Cheddar gained 3.7% at GDT, the broader EU cheese market shows no clear upward trend.
- Mozzarella remained flat at €4,046, underscoring stagnant market conditions.
- Gouda and Edam buyers and sellers remain far apart on price expectations, making significant price shifts unlikely in the near term.
💡 Market Implication: Cheese prices will likely remain range-bound until either supply tightens or demand strengthens, making a breakout unlikely for now.
What’s Next for EU Dairy Markets?
With NZ nearing the end of peak production, global buyers may turn to the EU for additional supply. However, the extent to which EU prices will capitalize on the bullish GDT sentiment depends on two key factors:
- Milk intake levels over the next few months.
- Internal EU demand trends, particularly in the butter and cheese segments.
For powders, this presents a clear window of opportunity for EU exporters to capture more global market share. However, uncertainty in butter and cheese continues to cloud the near-term outlook.
📢 Market Watch: Will EU dairy prices align with GDT’s bullish momentum? Or will internal pricing pressures hold them back? Stay tuned as we track the trends shaping global dairy trade.
