Skip to main content

February's dairy market update

11 February 2025 | 7 min read

Highlights for dairy

  • Global dairy prices have continued to rally over the past month. Gains in global dairy prices are being driven by tightening supply. The average sale price of all product categories have lifted in the past two sales events. Notably, both whole milk powder (WMP) and skim milk powder (SMP) have recorded consecutive lifts. Purchasing from the Middle East in preparation for Ramadan support WMP and butter prices. Demand is gradually improving, but supply is falling behind. Key producers in Australia and the US have both recently posted lower year-on-year production. With the gap between supply and demand unlikely to narrow in the medium term, downside to global pricing will be limited. Some volatility is expected as buyers back off should prices spike. But global dairy prices are well placed to maintain above average levels.
  • Australian milk production in December of 799 million litres was a one per cent year-on-year decline. This puts season to date production one per cent ahead of this time last year. All states recorded lower year-on-year output in December. Though results at a national level would have been worse if not for Victoria recording a marginal drop of 0.2 per cent. Lower production at this time of year is part of the normal seasonal cycle. But the concern is so far this season, year-on-year production has been up. December results indicate that dry conditions may be starting to impact milk production.
  • With the Global Dairy Trade Index now 17 per cent higher than when opening farmgate prices were set, local prices haven't kept pace. Step ups late last year lifted the average southern farmgate price to $8.20/kg MS, which is still 14 per cent lower than last season. In New Zealand, Fonterra has lifted farmgate prices 25 per cent from opening to sit around AUD$9.00/kg MS. Higher global pricing and fading local production are indicators new season prices will lift. But processors will be feeling the pressure to announce further step ups this season.

James Maxwell

Senior Agricultural Analyst

Jimmy is our Insights specialist for dairy which sits well with him due to his love of milk and cheese. His background is in cropping, having worked in the grains industry for over 15 years.

 

Bendigo Bank Agribusiness Insights publication(s) are for information purposes only and contain unsolicited general information, without regard to any individual objectives, financial situation or needs. Please refer to the terms and conditions.

Related Topics

Bendigo and Adelaide Bank acknowledges Aboriginal and Torres Strait Islander peoples as the First Peoples of this nation and the Traditional Custodians of the land where we live, learn and work. We pay our respects to Elders past and present as it is their knowledge and experience that holds the key to the success of future generations.

Bendigo and Adelaide Bank Limited, ABN 11 068 049 178 AFSL / Australian Credit Licence 237879. Any advice provided on this website is of a general nature only and does not take into account your personal needs, objectives and financial circumstances. You should consider whether it is appropriate for your situation. Please read the applicable Disclosure Documents before acquiring any product described on this website. Please also review our Financial Services Guide (FSG) before accessing information on this website. Information on this page can change without notice to you.

© Copyright 2025 Bendigo and Adelaide Bank