As 2025 begins, global dairy markets show mixed signals. Commodity prices are strengthening in key areas, while production trends vary across major exporting regions. From rebounding Chinese demand to ongoing challenges in the U.S., dairy farmers face a complex landscape of opportunities and hurdles.
Summary:
The global dairy market is showing mixed trends. Prices for key products like butter and whole milk powder are increasing, thanks to strong futures markets and positive auction results. Milk production is growing in places like the UK, New Zealand, and the EU, but the U.S. faces challenges because there aren’t enough young cows or heifers. China’s repurchasing more dairy, feed costs are stable, and people are trying new plant-based options, but traditional dairy is still prevalent. Farmers should focus on improving milk quality and watching costs while staying updated on what might change in the dairy market.
Key Takeaways
- Dairy commodity prices showed strength in several key areas, particularly WMP, and butter
- Milk production is increasing in major exporting regions, except for the U.S.
- Chinese dairy imports have rebounded, potentially signaling improved global demand
- Feed costs remain relatively stable, offering opportunities for strategic purchasing
- Policy changes and trade developments continue to create both challenges and opportunities for the sector
- Farmers should focus on efficiency, component production, and risk management strategies
The dairy industry experienced a complex mix of trends in the week leading up to Monday, January 27, 2025. Farmers, processors, and industry stakeholders closely monitor fluctuating prices, shifting milk production patterns, and evolving global demand trends. This recap aims to provide dairy farmers with crucial insights to effectively navigate the current market conditions.
Commodity Prices Show Strength in Key Areas
The dairy commodity markets demonstrated resilience in several sectors, offering a glimmer of hope for producers who have been grappling with tight margins:
Futures Markets Performance
- European Energy Exchange (EEX): Butter futures increased notably to an average of €7,295 for January-August 2025, showing a 1.2% rise compared to the previous week. This uptick suggests improved market sentiment for milk fat. Skim Milk Powder (SMP) futures also saw a modest gain, rising 0.4% to €2,655 for the same period.
- Singapore Exchange (SGX): Whole Milk Powder (WMP) futures for February-September 2025 showed notable strength, gaining 1.4% to an average of $3,914. SMP futures on the SGX platform also strengthened, climbing 0.8% to $2,970 for the corresponding timeframe.
Global Dairy Trade (GDT) Auction Results
Product | Price Change | Average Price |
---|---|---|
WMP | +5.0% | $3,988 |
SMP | +2.0% | $2,729 |
Butter | +2.2% | $7,550 |
AMF | -7.8% | Not provided |
Cheddar | +2.8% | $4,846 |
During the bi-weekly GDT auction on January 21, a strong market trend was confirmed:
- The Overall Price Index in the GDT auction rose by 1.4% to reach $4,146.
- WMP: jumped 5.0%, leading the gains
- SMP: rose 2.0%, indicating solid demand for milk proteins
- Butter: increased by 2.2%, aligning with the positive trend seen in futures markets
These GDT results are encouraging for dairy farmers worldwide. The significant rise in WMP prices, especially noteworthy due to renewed buying interest from key importing regions, indicates a buoyant market shift.
European Spot Market Quotations
European dairy product quotations as of January 22 showed a range of outcomes:
- Butter: The index rose €21 (+0.3%) to €7,434, with variations across countries:
- German butter stable at €7,400
- French butter up €21 (+0.3%) to €7,561
- Dutch butter increased €40 (+0.5%) to €7,340
- SMP: Overall index decreased by €14 (-0.6%) to €2,508:
- German SMP weakened by €50 (-2.0%) to €2,475
- French SMP gained €10 (+0.4%) to €2,500
- Dutch SMP remained flat at €2,550
- Whey: Held steady at €873, unchanged across all three primary quotations
- WMP: Index dropped by 3.8% to €4,275, with notable variations:
- French WMP plummeted €513 (-11.3%) to €4,030
- Dutch and German WMP remained stable at €4,430 and €4,365, respectively
Milk Production Trends: A Global Perspective
Region | Production Change | Notable Factors |
---|---|---|
EU-27+UK | +2.2% (Nov 2024) | Cumulative Jan-Nov: +0.7% |
UK | +4.3% (Dec 2024) | Strong year-end performance |
New Zealand | +1.4% (Dec 2024) | Season to date: +3.1% |
United States | -0.5% (2024 total) | Bird flu impact, heifer shortage |
Milk production patterns differed widely across major dairy exporting regions, creating both opportunities and challenges for the global market:
European Union and United Kingdom
- EU-27+UK: November 2024 production estimated at 12.39 million tonnes, up 2.2% year-over-year
- Cumulative production for January-November 2024: 148.6 million tonnes, +0.7% compared to 2023
- Milkfat content: 4.31%
- Protein content: 3.53%
United Kingdom
- December 2024: Production totaled 1.32 million tonnes, up 4.3% year-over-year
- November 2024: Reported at 1.26 million tonnes, a 5.2% increase from 2023
- 2024 Total: Cumulative production reached 15.48 million tonnes, up 1.1% from 2023
Milk Composition:
- December: 4.44% fat, 3.43% protein
- November: 4.43% fat, 3.46% protein
New Zealand
- December 2024: Collections reached 2.65 million tonnes, up 1.4% year-over-year
- Season 2024/25 to date: 13.16 million tonnes, a 3.1% increase from the previous season
- Milk Solids: December production up 1.4% to 228.3 million kgs
- 2024 Calendar Year: Total milk solids production of 1,923 million kg, up 2.1% from 2023
United States
- The U.S. dairy sector faced specific challenges in 2024, including impacts from avian influenza in California that affected production.
- Overall Production: Down 0.5% for the year, primarily due to impacts from avian influenza in California
- Herd Size: December 2024 saw 9.351 million milk cows, just 3,000 more than December 2023
- Regional Variations:
- California: Production plummeted 6.8% due to bird flu impacts
- Texas: Impressive 7.5% year-over-year increase
- Idaho: Strong 3.5% growth
- Wisconsin: Slight 0.1% uptick
The shortage of replacement heifers is significantly hindering potential herd growth for dairy farmers. While farmers are eager to expand given current price signals, the lack of replacement animals is a significant limiting factor.
Market Forces and Industry Dynamics
Various factors influence the dairy industry, including evolving global demand trends and dynamic market forces.
Global Demand Trends
Chinese Imports: December saw significant year-over-year increases across various dairy products:
- WMP: More than doubled
- SMP: Up 42%
- Whey powder: Increased 12%
- Cheese: Rose 17%
This uptick in Chinese purchasing activity fuels cautious optimism about global dairy demand recovery.
Feed Market Outlook
Feed Component | Price | Change |
---|---|---|
Corn (Mar) | $4.8575/bushel | Steady |
Soybeans (Mar) | $10.55/bushel | +$0.20 |
Soybean Meal | $304/ton | +$6.60 |
- Corn: March futures held steady at $4.8575 per bushel
- Soybeans: March contract added 20¢, reaching $10.55
- Soybean Meal: Futures jumped $6.60 to $304 per ton
While feed markets show some upward pressure, prices remain relatively stable, allowing farmers to lock in favorable rates for the coming months.
Consumer Trends and Market Evolution
- Plant-based alternatives, such as almond milk and soy-based products, are gaining significant traction in developed countries and gradually capturing a larger market share.
- Traditional Dairy: Maintains strong positions in emerging economies and specific product categories
- Butter Consumption: U.S. domestic butter consumption increased by 7% in 2024, following a 6% rise in 2023
Policy and Trade Developments
Several policy and trade factors are expected to affect the dairy sector in 2025:
- U.S. Federal Milk Marketing Order (FMMO) Reform: Ongoing discussions about potential changes to the pricing system could affect risk management strategies for both producers and processors
- Indian Union Budget 2025: Set for presentation on February 1, with the dairy sector anticipating measures to boost production through infrastructure investments and technological innovation
- Trade Relations: Potential tariffs and evolving trade agreements continue to create uncertainty in export markets
Implications for Dairy Farmers
In response to the current market conditions, dairy producers should consider implementing the following strategies:
- Optimize Component Production: With strong values for butterfat and protein, focus on nutritional strategies to boost milk solids output
- Monitor Input Costs: Keep a close eye on feed prices and explore opportunities to lock in favorable rates for the coming months
- Herd Management: In regions facing heifer shortages, prioritize cow longevity and explore alternative strategies for maintaining or growing herd size
- Risk Management: Utilize available tools such as futures contracts or forward contracts to hedge against price volatility
- Stay Informed: Keep abreast of policy developments, particularly potential FMMO changes in the U.S., which could significantly impact milk pricing
- Market Diversification: Explore opportunities to tap into growing markets or product categories, such as value-added dairy products or exports to emerging economies
The Bottom Line
As we progress through the early months of 2025, the global dairy market presents a complex and dynamic environment. Farmers must remain vigilant, adaptable, and focused on operational efficiency to navigate these challenging waters successfully. By staying informed about local conditions and global market forces, producers can position themselves to capitalize on opportunities and mitigate potential risks in the evolving dairy landscape.
Learn more:
- Global Dairy Trade: Key Insights Every Dairy Farmer Should Know
- Global Dairy Market Trends July 2024: Australia’s Rise as Argentina and New Zealand Face Challenges
- Is the Summer Heat Finally Over? Dairy Farmers See Milk Production Stabilize, but Challenges Remain!
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