Global dairy markets clash: Milk fat surges as powders stall. Argentina booms, China buys big, while Australia lags. Who wins?
EXECUTIVE SUMMARY: Global dairy markets sent mixed signals this week: futures wobbled as European butter stalled and Oceania milk fats rallied. Argentina’s milk production exploded (+19% solids), dwarfing Australia’s stagnation and New Zealand’s modest growth. China devoured imports (+24%), especially whey and butter, offsetting rising global milk solids. While powders like SMP faltered, milk fats held firm – EU butter prices sit 27% above 2024 levels. Traders face a split market: fats command premiums, powders face oversupply, and regional extremes rewrite supply chains.
KEY TAKEAWAYS
- Futures whiplash: Europe’s SMP futures sank (-0.7%) while Oceania milk fats rallied (+1.2% AMF), exposing regional demand splits.
- Production extremes: Argentina’s dairy surge (+15.9% milk) contrasts with Australia’s flatline (-0.1%) – supply maps redrawn.
- China’s hunger games: March imports jumped 24%, with whey (+36%) and butter pushing record highs – the demand lifeline.
- Fat rules: EU butter prices tower 27% above 2024 levels; SGX futures price AMF/butter equally ($6,833) – fat’s dominance holds.
- Powder paradox: SMP prices sag globally (-1.1% EU, -0.6% SGX) as Argentina/US milk solids flood markets – buyer’s market emerges.
The global dairy market is sending us mixed signals this week. Futures markets can’t seem to agree on direction, with European EEX butter holding steady while Oceania-focused SGX sees strengthening milk fat values. Physical markets are taking a breather after their recent rally but remain dramatically higher than last year’s. And let’s face it – the production side is all over the map, with Argentina’s explosive growth completely outpacing Australia’s stagnation. Meanwhile, China keeps gobbling imports like there’s no tomorrow, especially whey and butter, offsetting the rising milk solids production across most exporting regions.
FUTURES MARKETS SHOW THEIR CARDS
This week, dairy futures markets painted a confusing picture, with European and Oceania exchanges seemingly reading from different playbooks. What’s driving this regional divergence? Is it simply different supply fundamentals, or are traders making contradictory bets on where prices are heading?
European Energy Exchange (EEX) Trading
EEX saw 3,055 tonnes (611 lots) change hands last week, with butter accounting for 1,595 tonnes and SMP making up the remaining 1,460 tonnes. Tuesday dominated the action with 1,020 tonnes traded – did some major news hit mid-week to drive this flurry of activity?
EEX butter futures presented a head-scratcher – the April-November 2025 strip averaged €7,323, technically up 0.4% for the week, yet reports indicated futures “were traded lower.” This apparent contradiction hints at significant weekly volatility or a late recovery from early weakness. More telling was the eye-catching 9.6% jump in open interest (adding 266 lots to reach 3,046 lots total). When you see prices wobbling but tons of new market participation, what does that tell you? It suggests traders aren’t sure which way prices are heading but feel compelled to establish positions anyway.
EEX SMP futures showed clearer weakness, dropping 0.7% to €2,436 for April-November. Open interest surged by 290 lots to 6,114 lots – a 4.9% increase alongside falling prices. That’s typically a bearish signal in the trading world as new participants pile in on the short side.
Whey futures took the biggest hit on EEX, sliding 1.8% to €896 while open interest stayed flat – a classic sign of longs throwing in the towel rather than fresh bears entering the ring.
Singapore Exchange (SGX) Takes a Different View
SGX traders were busier, moving 5,356 lots/tonnes, with WMP dominating at 3,415 lots. The exchange also saw healthy trading in AMF (767 lots), butter (548 lots), and SMP (626 lots).
Here’s where it gets interesting – SGX traders were buying fats and selling powders:
| Product | Contract Period | Price Change | Average Price |
| WMP | May-Dec 2025 | -0.2% | $3,851/tonne |
| SMP | May-Dec 2025 | -0.6% | $2,889/tonne |
| AMF | May-Dec 2025 | +1.2% | $6,833/tonne |
| Butter | May-Dec 2025 | +0.7% | $6,833/tonne |
Isn’t it fascinating that AMF and butter futures settled at identical prices despite different weekly moves? This tells us traders value milk fat consistently regardless of form. But why’s SGX showing strength in fats while EEX butter futures send mixed signals? Could Oceania-focused traders be more bullish on milk fat’s prospects than their European counterparts?
EUROPEAN PHYSICAL MARKETS CATCH THEIR BREATH
European dairy prices took a breather this week after their recent climb, but don’t let that fool you – we’re still looking at eye-popping year-over-year gains that show just how far we’ve come since 2024.
EU Dairy Commodities – Fat Still King
EU butter nudged up just €5 (+0.1%) to €7,457 per tonne, with Dutch butter climbing €50 (+0.7%) while German butter dropped €40 (-0.5%). These weekly moves don’t amount to much, but step back and look at the bigger picture – butters up a staggering 27.2% from last year! That’s an extra €1,595 in your pocket for every tonne sold compared to April 2024. If that doesn’t get dairy farmers excited about milk fat, what will?
SMP markets weakened as the index slipped €27 (-1.1%) to €2,412. Oddly, French SMP bucked the trend with a hefty €70 (+3.0%) gain to €2,410 – what’s going on in France that’s different from the rest of Europe? Unlike butter’s impressive gains, SMP’s just 1.6% above last year – talk about underperformance! The gap between fat and protein markets couldn’t be clearer.
Whey continues its remarkable run, adding another €5 (+0.6%) to reach €863 per tonne and maintaining a spectacular 34.4% year-over-year gain. Isn’t it strange that physical whey prices keep rising while futures markets bet on declines? Someone’s going to be proven wrong – but who?
Cheese Markets Tap the Brakes
European cheese prices eased slightly across all major varieties, though they’re still sitting pretty compared to last year:
| Cheese Type | Weekly Change | Current Price | YoY Change |
| Cheddar Curd | -€68 (-1.4%) | €4,717/tonne | +16.6% |
| Mild Cheddar | -€27 (-0.6%) | €4,732/tonne | +16.2% |
| Young Gouda | -€4 (-0.1%) | €4,352/tonne | +13.7% |
| Mozzarella | -€17 (-0.4%) | €4,208/tonne | +17.1% |
Does this minor pullback signal a market correction or just a pause before the next leg up? With year-over-year gains between 13.7% and 17.1%, it’s hard to be too concerned about a little weekly weakness.
GLOBAL MILK PRODUCTION: A TALE OF TWO HEMISPHERES
March milk production data reads like a story of haves and have-nots, with some regions booming while others barely tread water. Has the global dairy supply map fundamentally changed, or are we seeing temporary, regional factors at play?
Argentina’s Running Wild
Argentina’s milk production is on fire! Collections surged an incredible 15.9% year-over-year to 841,000 tonnes in March. Even more impressive, milk solids jumped 19.3% to 61,600 tonnes, helped by solid component levels (3.84% fat, 3.48% protein). What’s driving this explosive growth? Favorable weather, improved economics, or recovery from previous challenges? Whatever the cause, Argentina’s transforming from a middle-weight player to a heavyweight contender in export markets.
UK and US Show Solid Gains
The UK’s pumped out 3.9% more milk, totaling 1.41 million tonnes, with milk solids up even more at 4.7% (reaching 110,000 tonnes). Across the pond, the US increased fluid milk by 0.9% to 9.00 million tonnes but boosted milk solids by a more impressive 2.6% to 696,000 tonnes. Thanks to stellar component levels – 4.37% fat and 3.36% protein, they’re achieving this. Isn’t it amazing how much more efficient dairy manufacturing becomes when those component percentages tick up?
Oceania Struggles to Find Its Footing
New Zealand managed just 0.6% growth in March (to 1.76 million tonnes), with milk solids up 0.8% to 173.99 million kgMS. The season-to-date figures look better at +2.6% for volume and +3.4% for milk solids, but can they maintain this momentum heading into their seasonal low period?
Australia can’t catch a break, with March collections essentially flat at -0.1% (614,000 tonnes). Despite the flat volume, they squeezed out 0.9% more milk solids (49,000 tonnes) thanks to impressive component levels (4.49% fat, 3.52% protein). Why’s Australia continuing to lag other major exporters? What challenges are they facing that others aren’t?
Here’s the kicker you can’t miss milk solids production is outpacing liquid milk collection growth across almost every region. That’s a mathematician’s way of saying components is up year-over-year. For processors, that’s like finding extra money in your pocket – more fat and protein to work with from every liter of milk collected.
INTERNATIONAL TRADE: CHINA TO THE RESCUE WHILE EU EXPORTS STUMBLE
Recent trade data shows China’s back on a buying spree, providing a crucial demand lifeline while EU exporters face headwinds in key markets.
China’s Appetite Returns with a Vengeance
Chinese dairy imports roared back in March 2025, with total imports surging 23.5% year-over-year. Don’t you wonder what’s driving this sudden hunger for imported dairy?
- Whey imports jumped significantly, pushing cumulative imports 35.8% above last year
- Butter imports remained “extraordinarily strong,” with rolling 12-month imports approaching record highs
- WMP imports increased year-over-year, with cumulative imports up 2.7%
- Infant Formula imports also rose compared to March 2024
The only laggard? AMF imports were much lower than last March – a curious contrast to butter’s strength. Are Chinese buyers simply preferring butter over AMF for their fat needs?
EU Exports Hit a Rough Patch
The EU27+UK saw exports drop 6.9% in February 2025 compared to February 2024. The primary culprit? Dramatically reduced SMP shipments to Algeria. Cheese exports managed a slight 0.2% gain, while Infant Formula exports showed an impressive 12.0% growth.
What’s happening in Algeria, causing the EU and New Zealand to lose massive export volumes to that market? Is it economic conditions, competition from other suppliers, or a policy change we’re not seeing?
New Zealand Exports Find Asian Demand
New Zealand’s dairy exports grew 4.5% in March 2025, powered primarily by strong Asian demand:
- China: +19% year-over-year
- Indonesia: +85% year-over-year
- Malaysia: +11% year-over-year
These gains offset declines in markets like Australia (-14%), Thailand (-16%), and that dramatic Algeria drop (-85%).
Product performance was mixed – SMP, butter, cheese, and cream exports held strong, while WMP (-3.6%) and AMF (-4.5%) slipped slightly. Isn’t it interesting that AMF exports from NZ and AMF imports to China weakened simultaneously? That’s not a coincidence.
THE BOTTOM LINE: MIXED SIGNALS WITH UNDERTONES OF STRENGTH
Let’s face it – the global dairy market’s sending us conflicting short-term signals but remains dramatically stronger than a year ago. What should you make of this?
Weekly price movements suggest consolidation rather than collapse – we’re catching our breath after a long uphill climb. But year-over-year comparisons tell the real story – butter up 27.2%, whey up 34.4%, cheese up 13-17%, and even laggard SMP up 1.6%. These aren’t the numbers of a weak market.
The fat premium isn’t going anywhere soon. Despite some weekly wobbles, milk fat values tower above protein markets. With Chinese butter imports nearing record highs and SGX fat futures still climbing, don’t expect this trend to reverse anytime soon. Are you curious why the market values fat more than protein today? It’s simple supply and demand – consumers want the real deal, and you can’t fake authentic milk fat.
For powders, the pressure is building. Every indicator points to weakness in the SMP market – futures down, physical prices down, and GDT auctions down. Yet the year-over-year gain, though modest at 1.6%, shows we’re not in crisis territory. With explosive milk production growth in Argentina and solid gains in the US and UK, there’s simply enough SMP.
The most fascinating market right now might be whey. Physical prices continue their remarkable run (+34.4% year-over-year!) while futures markets bet on declines. Who’s right? For now, China’s 35.8% import surge provides powerful support for current prices, but futures traders expect this strength to fade.
What can an innovative dairy producer or buyer do in this environment? Recognize we’re in a market consolidating gains rather than showing fundamental weakness. Position accordingly for seasonal pressures but remain ready for continued strength, particularly in the fat complex. And keep your eye on China – they’re the demand wildcard that could make or break these markets in the months ahead.
Isn’t it amazing how global this industry has become? When Argentina sneezes, New Zealand catches a cold, and when China goes shopping, everyone’s prices rise. That’s today’s interconnected dairy world – you must understand it to thrive.
Learn more:
- Global Dairy Market in 2025: Production Shifts, Demand Fluctuations and Trade Dynamics
Explores regional production contrasts, including Argentina’s 4.4% surge and the EU’s 2.0% growth, while analyzing demand shifts toward organic products and inflation challenges. - China Cranks Up Dairy Imports as Tariff War Rocks Global Supply Chains
Details China’s March 2025 import spike (+23.5%) and how New Zealand capitalizes on tariff advantages, while U.S. suppliers face exclusion due to 125% duties. - Global Dairy Market Trends 2025: European Decline, US Expansion Reshaping Industry Landscape
Examines structural EU challenges (herd reductions, regulations) versus U.S. growth fueled by cheese infrastructure, offering strategic insights for navigating regional disparities.
Join the Revolution!
Join the Revolution!Join over 30,000 successful dairy professionals who rely on Bullvine Daily for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
