Dairy markets are experiencing volatility as bearish sentiment emerges amid fluctuating supply and demand dynamics. The Global Dairy Trade (GDT) auction remained unchanged, while EU dairy futures saw declines, particularly in butter prices. Increased production in key regions and export competition are contributing to the uncertainty.
The dairy market is undergoing significant fluctuations as bearish sentiment gains traction across global trade platforms. The Global Dairy Trade (GDT) auction, a key benchmark for global dairy pricing, held steady at 0% change, but EU dairy futures saw notable declines.
The EU dairy market is facing uncertainty as butter prices fell sharply by nearly $271 this week, and futures for Q4 dropped to $7,855. Increased milk production in Ireland, the U.S., New Zealand, and Ukraine is adding to market pressure, while rising fat and protein content in dairy products further influences pricing trends.
Market Trends and Supply-Demand Dynamics
The supply-demand equation remains in flux, with tight spot supply keeping nearby contract prices high while increased market offers are introducing weaknesses. The U.S. dairy sector, facing export competition, is also seeing a shift in pricing due to recession fears and potential demand destruction.
While physical dairy markets remain constrained, futures markets are showing increasing pressure, with butter, cheese, and skim milk powder (SMP) prices experiencing downward trends.
Impact on Butter, Cheese, and Powder Markets
- Butter prices: Declined sharply, with Irish butter trading at $7,950 for May-July, and Polish butter ($7,900) showing a spread against Ukrainian butter ($7,250 DAP NL).
- Cheese markets: Mozzarella was listed at $4,560 for April, while Gouda was priced at $4,725 for prompt delivery.
- Powder markets: EU skim milk powder (SMP) saw unexpected price drops, with Q2 purchases at $2,495 and Q3 offers above $2,715.
Forward Market Expectations
Despite recent bearish sentiment, past months have seen price resilience driven by concerns over bluetongue, low initial stock levels, and strong demand. However, if milk volumes continue rising and demand weakens, bearish trends could persist.
The market remains on edge as buyers and sellers adjust expectations, with key players closely monitoring weather conditions, energy costs, and export competition in the coming months.
