As the Indian summer begins to cast its golden glow, March typically marks a gentler phase for the dairy sector. The milking season starts to taper, warm winds ripple through the fields, and much of the year’s output is already tied up in agreements. Yet, this March has danced to a slightly different tune. While official production numbers for the month won’t arrive until April, murmurs from the countryside suggest that dry spells in key dairying belts have pushed some farmers to halt milking earlier than usual. Even so, the season has been bountiful thus far, lifted by hopeful whispers of strong milk price returns.
Production Trends: A Mixed Yet Promising Picture
February’s milk production figures paint a mixed yet promising picture. Milksolids output slipped 2.0% year-on-year (YoY) to 171.16 million kg, but adjust for the leap year’s extra day, and it flips to a 1.5% YoY rise. Season-to-date, milksolids are running 3.2% ahead of last year. In tonnage terms, February delivered 1.865 million tonnes—a 2.6% YoY dip—but the leap year lens reveals a 0.9% uptick. Total tonnage for the season so far is up 2.4% YoY, with February’s haul edging 0.3% above the five-year average, a quiet nod to consistency amid change.
Looking forward, forecasts suggest a softening trend. March is expected to see a 1.9% YoY decline, with April and May projected to drop by 2.6% and 3.1%, respectively. Still, the season is on track to close about 2% higher than the last in milksolids—a sign of enduring strength.
Global Dairy Dynamics: A Patchwork of Performance
Globally, dairy production weaves a patchwork story. February saw the United States down 2.5% YoY, Australia off by 4.8%, and the United Kingdom easing 0.8%. In contrast, Argentina and Uruguay shone with gains of 8.3% and 1.6%, respectively. Europe’s latest figure, from December, showed a modest 0.3% YoY rise, with newer data still brewing.
At the trading tables, March’s global dairy auctions sidestepped the usual seasonal lull. The index dipped just 0.5% in one event and stayed steady at 0.0% in the next. Butter emerged as the star, riding a swell of demand to record highs—still a steal compared to European prices. Skim milk powder rose 0.6% in one round, while whole milk powder nudged up 0.2% in another. Buyers, though, grappled with jitters over possible U.S. tariffs under President Donald Trump’s watch, alongside supply squeezes elsewhere. This unease sparked a frenzy on the dairy derivatives market, with a single day clocking 31,000 lots traded—a jaw-dropping 174% jump from the prior high of 11,310 lots in August 2023.
Export Surge: Butter and Cheese Lead the Charge
India’s dairy exports held their own in February. Volumes climbed 4.6% YoY, while values soared 23%, driven by butter and cheese. Butter exports swelled 23.3% in volume and 57.0% in value, while cheese leapt 37.9% in volume and 47.9% in value. Beyond India’s borders, Argentina’s February exports dropped 11.3% in volume but scraped a 0.3% value gain. Australia’s January exports surged 24.4% in volume and 30.6% in value, while Europe’s January tally fell 7.7% in volume but rose 1.5% in value. The U.S. notched a 2.8% volume increase and a 17.2% value boost.
Milk Prices and Market Forces: A Golden Moment
This season, a rare alignment of fortunes has pushed milk prices to a striking INR 750/kgMS. Favorable early weather blessed India’s grazing lands, global economic winds tilted in its favor, demand from China roared back, and rivals stumbled under harsh climates and livestock ailments. Yet, the road ahead glimmers with uncertainty. Other dairy regions are itching to boost their yields, and U.S. tariff shadows loom large. How these forces unfold could test India’s export stride in the next season.
Looking Ahead: Preparing for the Next Chapter
As this cycle nears its end, farmers should turn their gaze to safeguarding their gains—tightening purse strings, sizing up risks, and planting seeds for tomorrow. The market has been generous, but preparing for a stormier spell could spell the difference between prosperity and perseverance in the seasons ahead.
