Dairy prices kept rising at the latest overnight Global Dairy Trade auction, fuelled by supply pressures and strong buying interest.
The average price climbed 5.7% overnight to US$4,301 (NZ$7,299) per tonne.
Cristina Alvarado, head of dairy insights at the New Zealand Exchange, noted that despite high milk production in major global regions, the volume offered at the auction declined.
She noted that Fonterra had one of the largest offerings, though New Zealand is now nearing the end of its milking season.
“New Zealand’s milk production curve is now firmly in seasonal decline,” Alvarado said. “Forward offer volumes through March to May indicate further easing.”
“At the same time, growing domestic protein demand in the United States and new cheese capacity not yet operating at full utilisation are absorbing milk locally.”
She explained that US product shortages have boosted demand for certain items, especially skim milk and butter.
Whole-milk powder prices increased 4.5% to US$3,863 per tonne.
Skim milk powder is up 9.1%, butter up 6.1%, mozzarella up 7.9%, and cheddar up 4.3%.
North and South Asia bought the largest volumes, but Alvarado highlighted percentage buying increases from Europe, the Middle East, and Africa.
“With ongoing geopolitical tensions affecting Middle Eastern logistics and trade lanes, and in the absence of recent Algerian tenders in the region, it is notable that EMEA [Europe, the Middle East and Africa] participation strengthened rather than retreated.”
Alvarado described the Middle East as a “significant” and “growing” market for New Zealand, ranking among its top three buyers.
“We would hope that despite everything going on and as we saw at the auction today, they’re still buying the product, even more so.”
Alvarado anticipates steady prices with ongoing increases, though likely at more modest rates.