Dairy prices strengthened at the latest Global Dairy Trade (GDT) auction, with the overall index increasing 2.3% as concerns over extreme weather and potential El Niño disruption raised questions about future milk supplies.
The average GDT price reached US$3,873 per tonne, following a marginal 0.1% increase at the previous auction.
Milk powders lead the rally
Whole milk powder (WMP), one of the most important products in global dairy trade, increased 3% to US$3,591 per tonne.
Skim milk powder (SMP) recorded an even stronger gain, rising 7.6%, bringing prices close to the 12-month highs recorded in May.
Other dairy commodities also posted gains:
- 🧀 Mozzarella: +6.1%
- 🥛 Lactose: +3.2%
- 🧀 Cheddar: +0.6%
However, milk fats moved in the opposite direction:
- 🧈 Butter: -2%
- Anhydrous milk fat: -6%
- Buttermilk powder: -3.5%
The declines were attributed to relatively ample global supplies of milk fats.
Weather becomes a key market concern
Market sentiment is increasingly being influenced by weather conditions.
New Zealand Exchange dairy analyst Rosalind Crickett noted that strong milk production so far this year could be challenged by record-high temperatures in the Northern Hemisphere and the potential for a particularly strong El Niño event in the Southern Hemisphere.
Drought conditions are already creating concerns in some producing regions, with reports suggesting farmers are beginning to use winter feed reserves earlier than usual.
While recent production data from Europe and the United States continues to show growth, worsening weather conditions could alter the global supply outlook in the coming months.
Buyers prepare ahead of the festive season
The timing of the auction is also significant, with dairy buyers looking to secure supplies ahead of the upcoming festive season.
Strong demand combined with uncertainty around future milk production is providing additional support to several dairy commodities, particularly milk powders.
Trading volumes remain strong
The latest auction saw 41,054 tonnes of dairy products sold to 130 winning bidders.
This compares with 40,504 tonnes sold to 132 winning bidders at the previous auction.
The results highlight continued participation in the global dairy market despite uncertainty surrounding production and weather conditions.
Global milk supply remains mixed
Production trends remain varied across major dairy-producing regions.
Fonterra recently increased its 12-month butter volume forecast by 4.7%, while US butter production increased 8.5% year-on-year in June. European butter production also rose 5.4% in May.
New Zealand’s upcoming milk production data is expected to provide further insight into the country’s supply trajectory, with current reports indicating relatively strong pasture conditions and adequate supplementary feed availability.
Outlook for global dairy prices
The latest GDT auction highlights the increasingly complex outlook for global dairy markets.
Strong production is currently limiting prices for some milk-fat products, while concerns over extreme heat, drought and a possible El Niño-driven supply disruption are supporting milk powders and several other commodities.
As weather conditions evolve and buyers prepare for seasonal demand, global milk supply will remain a key factor influencing dairy prices through the remainder of 2026.
