Welcome to the Bull Vine Podcast, your go-to source for inside stories, cutting edge research,
and the latest updates in the world of dairy farming.
In our 139th episode, we explore the latest global dairy market trends.
So please grab a glass of milk, sit back, and let's get started with this episode.
Welcome to the Bull Vine Podcast.
I'm Douglas, and today we're joined by Bella to discuss the latest global dairy market
report.
Bella, what's the overall picture as we start 2025?
Thanks, Douglas.
As we kick off 2025, the global dairy markets are showing mixed signals.
We're seeing commodity prices strengthening in key areas, while production trends vary
across major exporting regions.
From rebounding Chinese demand to ongoing challenges in the U.S., dairy farmers are
facing a complex landscape of opportunities and hurdles.
That's quite a mix.
Let's dive deeper into these trends.
Can you break down the commodity prices for us?
Certainly, Douglas.
The dairy commodity markets have shown resilience in several sectors, offering a glimmer of
hope for producers who have been grappling with tight margins.
Let's start with the futures markets.
On the European Energy Exchange, or EEX, butter futures have rebounded significantly.
The January-August 2025 strip is averaging €7,295, which marks a 1.2% increase week
over week.
This uptick suggests improved market sentiment for milk fat.
Skim milk powder futures on the EEX also saw a modest gain, rising 0.4% to €2,655 for
the same period.
Over on the Singapore Exchange, or SGX, whole milk powder futures for February-September
2025 showed notable strength, gaining 1.4% to reach an average of $3,940.
SMP futures on the SGX platform also strengthened, climbing 0.8% to $2,970 for the corresponding
timeframe.
The global dairy trade auction on January 21 provided further evidence of market firmness.
The overall price index increased by 1.4%, reaching $4,146.
Whole milk powder jumped 5.0%, leading the gains.
Skim milk powder rose 2.0%, indicating solid demand for milk proteins.
Butter increased by 2.2%, aligning with the positive trends seen in futures markets.
These results are encouraging for dairy farmers worldwide.
The significant rise in WMP prices in particular suggests renewed buying interest from key
importing regions.
That's a comprehensive overview, Bella.
It seems like there's a lot of positive movement in the markets.
How about milk production trends?
Are we seeing similar patterns globally?
Actually Douglas, milk production patterns varied significantly across key dairy exporting
regions, presenting both opportunities and challenges for the global market.
Let's break it down by region.
In the European Union and United Kingdom, November 2024 production was estimated at
12.39 million tons, up 2.2% year over year.
Milk production for January-November 2024 reached 148.6 million tons, which is 0.7%
higher compared to 2023.
The milk fat content was at 4.31%, while protein content was at 3.53%.
Looking specifically at the United Kingdom, December 2024 production totaled 1.32 million
tons, up 4.3% year over year.
November 2024 was reported at 1.26 million tons, a 5.2% increase from 2023.
The total for 2024 reached 15.48 million tons, up 1.1% from 2023.
Milk composition in December showed 4.44% fat and 3.43% protein, while November had
4.43% fat and 3.46% protein.
Moving to New Zealand, December 2024 collections reached 2.65 million tons, up 1.4% year over
year.
The 2024-25 season to date totals 13.16 million tons, a 3.1% increase from the previous season.
Milk solids production in December was up 1.4% to 228.3 million kilograms.
For the 2024 calendar year, total milk solids production hit 1,923 million kilograms, up
2.1% from 2023.
It sounds like production is up in most regions.
How about the United States?
Are we seeing similar trends there?
Actually Douglas, the U.S. dairy sector faced unique challenges in 2024.
Overall production was down 0.5% for the year, primarily due to impacts from avian influenza
in California.
The December 2024 herd size was 9.351 million milk cows, just 3,000 more than December 2023.
Regional variations were significant.
California saw production plummet 6.8% due to bird flu impacts.
On the other hand, Texas had an impressive 7.5% year over year increase.
Idaho showed strong growth at 3.5%, while Wisconsin had a slight 0.1% uptick.
A key factor limiting growth in the U.S. is the heifer shortage.
While farmers are eager to expand given current price signals, the lack of replacement animals
is a significant limiting factor.
It sounds like production is up in most regions.
How about the United States?
Are we seeing similar trends there?
Actually Douglas, the U.S. dairy sector faced unique challenges in 2024.
Overall production was down 0.5% for the year, primarily due to impacts from avian influenza
in California.
The December 2024 herd size was 9.351 million milk cows, just 3,000 more than December 2023.
Regional variations were significant.
California saw production plummet 6.8% due to bird flu impacts.
On the other hand, Texas had an impressive 7.5% year over year increase.
Idaho showed strong growth at 3.5%, while Wisconsin had a slight 0.1% uptick.
A key factor limiting growth in the U.S. is the heifer shortage.
While farmers are eager to expand given current price signals, the lack of replacement animals
is a significant limiting factor.
That's quite a contrast to what we're seeing in other parts of the world.
Let's shift gears a bit and talk about market forces and industry dynamics.
What are the key factors shaping the current dairy landscape?
There are several key factors at play, Douglas.
First, let's look at global demand trends.
Chinese imports saw significant year over year increases across various dairy products
in December.
Whole milk powder imports more than doubled, skim milk powder was up 42%, whey powder increased
by 12%, and cheese rose 17%.
This uptick in Chinese purchasing activity is fueling cautious optimism about global
dairy demand recovery.
In terms of feed market outlook, corn futures for March held steady at $4.8575 per bushel.
Millions for March added 20 cents reaching $10.55, while soybean meal futures jumped
$660 to $304 per ton.
While feed markets show some upward pressure, prices remain relatively stable, offering
farmers opportunities to lock in favorable rates for the coming months.
We're also seeing interesting consumer trends and market evolution.
Plant-based alternatives continue to gain market share, particularly in developed markets.
However, traditional dairy maintains strong positions in emerging economies and specific
product categories.
In the U.S., domestic butter consumption increased by 7% in 2024, following a 6% rise in 2023.
Those are some interesting trends, Bella.
How about policy and trade developments?
Are there any significant changes on the horizon that dairy farmers should be aware of?
Absolutely, Douglas.
Traditional policy and trade factors are poised to impact the dairy sector in 2025.
In the United States, there are ongoing discussions about potential changes to the Federal Milk
Marketing Order FMMO pricing system.
These changes could affect risk management strategies for both producers and processors.
In India, the Union Budget 2025 is set for presentation on February 1st.
The dairy sector is anticipating measures to boost production through infrastructure
investments and technological innovation.
On the international front, potential tariffs and evolving trade agreements continue to
create uncertainty in export markets.
Dairy farmers and industry stakeholders will need to keep a close eye on these developments
as they unfold.
Given all these factors, from production trends to market dynamics and policy developments,
what are the key implications for dairy farmers?
How can they navigate this complex landscape?
That's a great question, Douglas.
Given the current market conditions, dairy producers should consider several strategies.
One, optimize component production.
With strong values for butter, fat, and protein, farmers should focus on nutritional strategies
to boost milk solids output.
Two, monitor input costs.
It's crucial to keep a close eye on feed prices and explore opportunities to lock in favorable
rates for the coming months.
Three, herd management.
In regions facing heifer shortages, prioritizing cow longevity and exploring alternative strategies
for maintaining or growing herd size will be important.
Four, risk management.
Utilizing available tools such as futures contracts or forward contracts to hedge against
price volatility can help mitigate risks.
Five, stay informed.
Keeping abreast of policy developments, particularly potential FMO changes in the U.S., will be
crucial as these could significantly impact milk pricing.
Six, market diversification.
Exploring opportunities to tap into growing markets or product categories, such as value-added
dairy products or exports to emerging economies, could open up new revenue streams.
Those are some solid strategies, Bella.
As we wrap up, what's your bottom line for dairy farmers as we move through the early
months of 2025?
The bottom line, Douglas, is that the global dairy market presents a complex and dynamic
environment.
Farmers must remain vigilant, adaptable, and focused on operational efficiency to navigate
these challenging waters successfully.
By staying informed about both local conditions and global market forces, producers can position
themselves to capitalize on opportunities and mitigate potential risks in the evolving
dairy landscape.
Key takeaways for our listeners.
One, dairy commodity prices showed strength in several key areas, particularly WMP and
butter.
Two, milk production is increasing in major exporting regions, with the notable exception
of the U.S.
Three, Chinese dairy imports have rebounded, potentially signaling improved global demand.
Four, feed costs remain relatively stable, offering opportunities for strategic purchasing.
Five, policy changes and trade developments continue to create both challenges and opportunities
for the sector.
Six, farmers should focus on efficiency, component production, and risk management strategies.
Thank you, Bella, for this comprehensive overview of the global dairy market.
To our listeners, we hope this information helps you navigate the complex landscape of
the dairy industry.
Remember to stay informed, adapt to changing conditions, and focus on efficiency in your
operations.
Until next time, this is Douglas, signing off for the Bull Vine Podcast.
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