Rapid growth in global milk production is significantly outpacing current demand for standard dairy products. According to agrarheute, record milk output in New Zealand and the United States continues to push prices lower at Global Dairy Trade (GDT) auctions, with further downward pressure expected.
The global dairy market is facing increasing price pressure as milk production continues to expand across the world’s major exporting regions. Strong output in New Zealand, the United States and Europe has created a supply surplus that current demand is unable to absorb.
At the latest Global Dairy Trade auction, the average price index fell by 2.8%, with the average winning price reaching US$3,979 per tonne. Skim milk powder prices declined by 3.6%, while whole milk powder prices dropped by 3.1%, reflecting cautious buying activity.
According to Christina Alvarado, Head of Dairy Insights at the New Zealand Exchange (NZX), exceptionally strong milk production across key dairy-producing regions is increasing product availability and putting significant downward pressure on wholesale dairy prices.
New Zealand remains the main driver of the production surge. Milk production reached a record 160.5 million kilograms of milk solids in April, up 6.9% year-on-year, with early data indicating that production continued to grow in May. Milk output also increased by 2.7% in the United States, 4.1% in Australia, 9.7% in Uruguay and 4.2% across Europe.
Meanwhile, China remains the exception, with domestic milk production falling by 6% in April as the sector continues restructuring amid weak domestic demand.
The oversupply is also reflected in European milk markets. Spot milk prices in Germany have fallen to around 27.5 euro cents per kilogram in southern regions and 24 euro cents in northern Germany, while milk production in Germany is running 6.6% above last year’s level.
Although New Zealand’s dairy exports increased by 12.5% in April, supported by stronger demand from China for whole milk powder, growing competition among major exporters is expected to keep global dairy prices under pressure in the coming months.
Source: agrarheute
