Global Dairy Prices Tumble 1.6%

January 5, 2016 08:54 AM

The aggregated, index price for world dairy prices fell 1.6% on the GlobalDairy Trade auction today in New Zealand.

Skim milk powder (SMP) was down 0.8%, to 86¢/lb, and whole milk powder fell 4.4%, to $1/lb. But butter was up strongly, gaining 6.7% to $1.50, and cheddar cheese rose 3.5% to $1.34.

The U.S. remains competitive on SMP, with Chicago Mercantile Exchange prices averaging 76¢/lb.  But we remain out of the money on barrel cheese, at $1.52/lb., butter at $2.04/lb. and whole milk powder, which ranges in price from $1.24 to $1.45/lb. here domestically. A strengthening U.S. dollar and a weaker New Zealand currency also place U.S. exports at a disadvantage.

Volume on today’s auction was 25,671 metric tons, up 3% from two weeks ago. But this was still the lowest volume traded since last April.

A 'real' recovery in world markets might not occur until SMP prices rise above $3,000/ton, says Marc Beck, executive vice president of strategies and insight for the U.S. Dairy Export Council.  And to support supply-chain growth from the farm through to the consumer, SMP prices would have to rise closer to $3,500/ton. That, unfortunately, might not happen for a year, he says.  Read his blog on a global market recovery here. 





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