Following the auction results, the price index decreased amidst falling butter prices in Europe and Oceania and lower milk powder prices. The market is entering a period of lull, as most buyers have already concluded contracts for the supply of commodity goods ahead of the New Year holidays, according to Georghii Kukhaleishvili, analyst at the Association of Milk Producers (AMP).
The 393rd GDT (Global Dairy Trade) auction took place on Tuesday, December 2nd. The results showed that the price index was 1054, which is 48 points (-4.3%) less than the previous auction. The average price for dairy products was $3,507 per tonne, which is $171 more than the results of the previous auction. 34,282 tonnes of commodity products were sold during the trading, which is 4,330 tonnes less than the previous auction. The minimum offer was recorded at 33,466 tonnes, and the maximum was 40,668 tonnes. 146 dairy market operators participated in the trading, which is 20 companies fewer than on November 18th.
Based on the auction results:
The price for Anhydrous Milk Fat (AMF) was $5,902 per tonne, which is 9.8% less than the previous auction. According to the USDA, the surplus supply of raw milk on the global market is pressuring AMF prices in Oceania. Export prices for the commodity have decreased significantly. Futures contracts anticipate a further decline in AMF prices, indicating an oversupply of the product. According to the GDT forecast, AMF may decline by 8.1% in January and 9.4% in February 2026.
The price for Butter at this auction was $5,169 per tonne, which is 12.4% less than the results of the previous auction. As reported by the USDA, the cream supply in the US is more than sufficient, and butter inventories are quite significant. Butter demand was active in retail networks ahead of Thanksgiving, while sales to the food service industry were slow. American milk processing enterprises are reducing butter production volumes, and excess cream is directed towards the manufacture of other dairy products, for which demand is more active. American butter with 82% fat remains competitive in export markets. The decline in butter prices continues in Europe.
According to the Irish Farmers Journal, butter in the EU fell by €310 last week, and the price dropped to €4.5 thousand per tonne. European butter is getting cheaper due to an excessive supply of cream, stable production, the accumulation of warehouse stocks, and slow demand in the markets of Asia and the Middle East. According to the USDA, butter prices are significantly decreasing in Oceania amid increased milk yields and increased production volumes of the finished product. Demand for butter from Oceania has slowed in export markets because buyers prefer discounted products from the US and Europe. According to the Rural News Group, since May 2025, butter has fallen from $8,000 to $5,100 per tonne over the last GDT auctions.
According to NZX Dairy Market Manager Kristina Alvarado, the surplus milk supply is putting pressure on prices due to the imbalance between supply and demand. The price decline for commodity goods will stop if demand picks up. Buying activity in the markets slows down at the end of the year, especially during Christmas, New Year, Chinese New Year, and Ramadan, as many buyers have already concluded contracts for future periods. Auction organizers expect butter prices may fall by 13.4% in January and 12.3% in February.
The price for Whole Milk Powder (WMP) was $3,364 per tonne and decreased by 2.4% compared to the results of the previous auction. According to the USDA, WMP prices fell in the EU and Oceania amid rising raw milk production volumes and increased supply of the commodity in all regions of the world under conditions of limited demand. Fonterra revised its forecast for procurement prices downwards for the first time since 2023 in the middle of the production season, amid falling global WMP prices. In South America, prices for the commodity are stable amidst moderate demand in Brazil. Dairy market analyst Chris Walkland believes that the collapse in commodity prices was caused by a global surplus of raw milk.
According to his information, the milk surplus formed in the summer when traders were on vacation and market activity slowed. Walkland suggests that companies sought to quickly dispose of dairy product stocks this year to avoid losses after the new Trump administration tariffs came into effect and to improve their accounting performance. As a result of this sell-off, an excessive amount of goods entered the market. Analyst Chris Walkland believes that the surplus milk supply may decrease due to the rapid reduction of the cow herd in the US. According to the USDA, the cow herd in the US has decreased by 7 thousand head since December 2024 due to falling raw milk prices. Auction organizers forecast a price reduction for the commodity of 3.2% in January and 2.2% in February 2026.
The price for Skim Milk Powder (SMP) was $2,498, which is 1.6% less than the results of the previous auction. As reported by the USDA, SMP prices did not change in Oceania and South America in the second half of November, but slightly strengthened in the US and Europe. Production volumes of the commodity are increasing amidst an oversupply of raw milk. There is stable demand for American SMP in Mexico and Asian countries. In November, contract negotiations continued for the supply of the commodity from Oceania for the 1st and 2nd quarters of 2026. According to the GDT forecast, the commodity may decline by 1.5% in January but increase by 1.8% in February 2026.
Cheddar Cheese rose to $4,639 per tonne (+7.2%), and Mozzarella Cheese fell to $3,182 per tonne (-1%). According to the USDA, demand for American cheese in export markets has picked up amid weakening prices and the approaching New Year holidays. In Europe, demand for cheese has become active in supermarkets, from the food service industry, and in export markets amid falling prices for the commodity. According to Mintel, cheese is eaten daily in the US, the UK, and Germany, but rising prices are forcing people to choose budget categories of the product.
In Japan, about 4% of people consume cheese daily, mostly older women and mothers, while young men quickly reduce purchases when prices rise. However, Japanese spending on cheese is high due to the popularity of processed cheese and national brands. According to Mintel observations, cheese is gaining popularity among youth in Thailand and is a familiar product to the local population. Thai consumers are open to experimenting with new flavors. Growth points include cheeses with bright flavors, premium products, and dishes using cheese for a light snack. Auction organizers expect Cheddar cheese may increase by 7.7% in January and 6.4% in February, and Mozzarella cheese may decline by 0.9% in February 2026.
Lactose rose to $1,250 per tonne (+4.2%). According to the USDA, demand for the commodity is quite active in Southeast Asia, and warehouse stocks are limited. Auction organizers forecast a price increase for lactose of 5% in January and February 2026.
Buttermilk Powder rose to $2,903 per tonne (+1.8%). According to the USDA, some demand activation for the commodity was observed in the US in the second half of November with the start of the baking season during the autumn and winter holidays. Demand for the commodity is stable in export markets. According to the GDT forecast, the commodity may decline by 7.1% in January but increase by 6% in February.
The next GDT auction will take place on December 16th.
Press service of the Association of Milk Producers
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