GDT Auction Highlights
In a notable shift, the latest Global Dairy Trade (GDT) auction has seen butter and skim milk powder (SMP) prices exceed those in Europe, a rare trend with significant implications for global dairy trade. The overall GDT index declined by 0.6%, with SMP dropping 2.5% and cheddar cheese falling by 3.4%. Meanwhile, butter prices increased by 2.2%, and whole milk powder (WMP) saw a marginal 0.2% decline. This divergence, where GDT butter and SMP outprice European equivalents, underscores shifting global demand patterns, benefiting Irish and New Zealand exporters.
European Market Trends
European dairy prices continue to show a gradual decline. Butter prices have fallen below the €7,000 per tonne threshold for the first time since August 2024, now standing at €6,970 per tonne. While this remains historically high—comparable to peak prices in 2022—it signals a downward trend. WMP prices have remained stable, cheddar has seen slight gains, while SMP has recorded minor price drops.
Indian Market Estimates (Jordbrukare Data and Market Feedback)
India, once competitive in global SMP exports, has seen a sharp price increase over the past three months. Indian cow SMP is now at $3,000 CFR, while mixed milk SMP is priced at $3,300 CFR, making Indian exports uncompetitive in the short term. In contrast, Indian butter remains competitive, with mixed milk butter available at $5,150 CFR and cow butter at $5,300 CFR. Indian WMP prices are estimated at $3,317 CFR, following the SMP price surge. These estimates suggest that India will likely remain uncompetitive in SMP and WMP exports for at least the next two months, while butter continues to hold an attractive pricing advantage in global markets.
The higher GDT prices for butter and SMP relative to Europe offer an advantage to Irish dairy producers, signaling strong global demand. However, India's reduced SMP and WMP competitiveness may shift trade flows, potentially opening opportunities for Irish and European suppliers in export markets like Bangladesh and Southeast Asia.
Industry Performance
Major European dairy processors, including Arla and FrieslandCampina, have reported strong profitability gains in 2024, recovering from weaker performances in 2023. Similarly, Kerry Dairy Ireland has shown positive results, reinforcing the strength of the European dairy industry despite price fluctuations.
Conclusion
The ongoing shifts in GDT, European, and Indian dairy markets present a mixed outlook. While butter remains competitive across global markets, India's SMP and WMP are unlikely to regain competitiveness in the short term. These trends create opportunities for Irish and European exporters, particularly in regions where India was previously a major supplier.
