April 9, 2012

Global whole milk powder prices down 2.8% in 20 months

At the latest global dairy trade auction, whole milk powder (WMP) prices dropped by 2.8% to their lowest level in 20 months.

While overall values rose by a collective 1.5% across all dairy categories at the auction, the prices for WMP hit their lowest level since Aug 2010, and down 30% in total since their peak of March 2011.

Dairy sector analysts have been interpreting this fall in WMP price as indicating a likelihood that milk prices will remain under pressure until at least mid-2012.

Nonetheless, there were more favourable results for some dairy sectors, with a 13% rise in the prices being paid for cheddar cheese, milk protein concentrate and rennet casein versus the previous auction.

The current downward pressure on dairy prices is being driven by a surplus of supply from New Zealand, the sector's top global exporter, whose January output was up 10%. Prices are also being driven down by broader macro factors such as the economic downturn across Europe.