Dairy product prices rose against the background of the El Niño weather factor

The GDT price index rose by 2.5% compared to the previous trading event, with the average winning price reaching USD 4,021 per tonne. According to NZX Dairy, milk powders showed robust growth, while the weakening of dairy fats continued.

The price of whole milk powder increased by 4.4% to USD 3,760 per tonne, and skimmed milk powder rose by 3.4% (to USD 3,975 per tonne), reaching a four-year high. Buttermilk powder gained 8.4% (USD 4,694 per tonne), butter decreased by 0.4% (USD 4,721 per tonne), and Cheddar cheese dropped in price by 7.4% (USD 3,645 per tonne).

NZX Dairy analyst Rosalind Crickett noted that the auction results generally matched SGX-NZX futures market expectations, with the exception of butter, the decline of which was smaller than forecast. North Asian buyers showed high activity, especially in the short-term contract segment. The trading results could also have been influenced by pre-holiday stock replenishment amid concerns over product availability, as well as drought risks and geopolitical tensions.

According to published data, New Zealand milk production for September increased by 1.9% in milk solids, setting a new record. However, growth rates are slowing: drier-than-usual spring conditions are observed in North Island regions, and risks of El Niño are taken into account for the early and mid-summer outlook. According to Crickett, the growth of cheese production against the backdrop of global demand for whey protein products continues to exert downward pressure on Cheddar prices.

New Zealand milk production volumes for the season up to September increased by 2.0%, and over the 12-month period by 3.4%. The rise in dairy futures in recent months reflects the strengthening of milk prices and the weakening of the New Zealand dollar. Earth Sciences NZ forecasting expert Chris Brandolino reported that drier-than-usual conditions are expected in the northern and eastern parts of the islands, and producers should prepare for various scenarios caused by El Niño.