Global dairy prices hit near two-year low as oversupply bites
Dairy prices have dropped to their lowest point in nearly two years after another fall in global auctions. The decline follows eight straight decreases, with oversupply and weak demand pushing costs down further. Industry analysts now expect milk payouts to farmers to shrink as a result.
The latest Global Dairy Trade auction saw the price index hit its weakest level since January 2024. The average selling price fell by 4.3%, landing at US$3,507 per tonne. Whole milk powder, a key commodity, dropped 2.4% to US$3,364 per tonne—a steeper decline than many had predicted.
Butter prices took a sharper hit, plunging over 12%, while cheddar defied the trend with a 7% rise. North Asia dominated buying activity, accounting for half of all purchases in the auction. Meanwhile, Mexico, the Caribbean, and South Asia also remained active buyers, partly driven by rising US dairy exports and efforts to balance unstable domestic markets.
The broader slump comes as global milk production shows no signs of easing. Chinese milk collections have rebounded, adding to the surplus. With supply outpacing demand, dairy companies have cut their milk price forecasts for farmers. The midpoint now sits at $9.50 per kilogram of milk solids, reflecting the softer market conditions.
The extended price decline has left the dairy sector facing lower returns for the foreseeable future. Farmers and processors will need to adjust as oversupply continues to weigh on global markets. The next auction results will reveal whether the downward trend persists or if demand begins to stabilise.
