Milk in key exporting regions
%-change versus previous year
Europe
A lot of pressure on the liquids market
As the buyside is about to close the books towards Christmas, pressure rises in the EU market for dairy liquids. Spot milk is traded at EUR 0.19 in the Netherlands, EUR 0.20 in Germany and EUR 0.25 in France. However, prices for “Christmas milk” which is generally collected in the final week of the year are at EUR 0.15 or lower in Western Europe. Price is almost an irrelevant concept as processing capacity is not sufficient to absorb the surpluses in the final weeks of the year. Trades for spot milk after new year are starting to be closed already but the final weeks of this year are the real challenge. In theory prices for both cream and skimmed solids are interesting enough to allow for profitable butter and SMP manufacturing, but processing capacity remains the bottleneck.
Americas
US milk surplus continues to build
If there’s one conclusion to be drawn from the US supply situation, then it is that its apparently unstoppable growth will eventually require a fundamental change in priorities of the domestic market relatively to export markets. Not only because of the current supply growth rate – which was even above 4% in October – but also because preliminary local consumption stats reveal that the domestic market may require less milk in 2025 than last year. This adds additional pressure to the need to develop a sustainable export strategy for the US dairy sector. Which may be quite a challenge due to the somewhat negative sentiment in some import regions since the tariff disputes.
Asia-Pacific
Farmer sentiment remains very positive
The gradual commodity price erosion at GDT and the recent decline in Fonterra’s forecast milk price for this season has not yet dented the local business mindset in farmer circles. Maybe because the price drops at GDT are somewhat more gradual than in the EU and the US, maybe because the local APAC market still feels more balanced than the EU and the US market. Australia’s milk output is still going backwards while local demand is positive. And demand in the Asian regions still favors New Zealand origins in most product categories despite growing availability at favorably low prices from other export regions.
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