Stronger buying interest lifts prices despite synchronized production growth across key exporting regions
Global dairy markets regained momentum in February as strengthening demand absorbed expanding milk supplies across major exporting countries, pushing international prices higher.
Although milk production increased across all principal dairy-exporting regions, buying activity proved robust enough to support firming price levels. Reflecting this improved balance, New Zealand dairy cooperative Fonterra raised the midpoint of its 2025/26 Farmgate Milk Price forecast from $9.00 per kgMS to $9.50 per kgMS.
New Zealand Sets January Production Record
In New Zealand, January milk production delivered a strong seasonal performance. Milksolids collections reached 217.95 million kgMS, marking a 2.9% year-on-year (YoY) increase and setting a new record for the month.
Season-to-date output is now running 3.1% above last season, exceeding earlier expectations of a 2.0% rise. On a liquid milk basis, January volumes totaled 2.43 million tonnes, up 2.0% YoY, with cumulative season volumes 2.3% ahead of last year. The data indicates steady — but not excessive — supply growth.
Production Expands Across Major Regions
Milk output growth was not confined to New Zealand. Other key producers reported similar trends:
- United States: +3.2% YoY in January
- Argentina: +9.7% YoY
- Uruguay: +7.5% YoY
- Australia: +1.5% YoY
- China: +1.1% YoY (December)
- European Union: +5.0% YoY (November)
Within the European Union, notable gains were recorded in Germany (+7.5%), France (+6.3%), and the Netherlands (+7.3%), signaling synchronized production growth across the world’s principal dairy exporters.
GDT Auctions Signal Demand Recovery
Despite ample global supply, demand momentum re-emerged strongly through the month, particularly via the Global Dairy Trade (GDT) platform.
- Event 397 recorded a 6.7% increase in the GDT Price Index, led by:
- Skim Milk Powder (SMP): +10.6%
- Butter: +8.8%
- All products posting gains
- Event 398 followed with a further 3.5% rise:
- SMP: +3.0%
- Whole Milk Powder (WMP): +2.5%
- Butter: +10.7%
- Cheddar was the only product to decline
The final Pulse auction of the month delivered mixed but generally constructive results. SMP and butter strengthened further, while WMP remained stable compared to the prior event. Anhydrous Milk Fat (AMF) eased slightly versus Event 398 but rose compared to the previous Pulse auction.
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Overall, auction outcomes indicate that demand has been strong enough to lift prices despite expanding global supply.
Trade Data Still Reflects Earlier Weakness
January trade figures from New Zealand, however, continue to reflect softer demand conditions seen in late 2024.
Total dairy export volumes declined 3.3% YoY to 360,225 metric tonnes, with export values also down 3.3% YoY as lower fourth-quarter prices converged with year-earlier levels.
Key highlights:
- WMP exports: −5% YoY
- Shipments to Central America: +128%
- Asia (excluding China): −5%
- North Africa: −71%
- China: +2%
SMP exports were down 11% year-to-date, with shipments to China declining 26%, partially offset by modest gains in other regions.
Mixed Global Trade Performance
Trade activity in other exporting nations showed mixed trends:
- China’s total dairy imports: −3.4% YoY (December)
- United States dairy exports: +14.3% YoY
- Argentina dairy exports: +36.3% YoY (January)
- Australia dairy exports: −15.0% YoY
- EU-27 dairy exports: +15.0% YoY
Outlook: Recovery Signals Emerging
While January trade data reflects earlier demand softness, February’s strong auction results suggest renewed buying interest. If current pricing momentum continues, export volumes and values for February and March are expected to show signs of recovery, aligning more closely with the firmer tone now evident across global dairy markets.
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