Milk Powder Prices Keep Climbing
October 19, 2021
Milk powder prices are on the rise around the world. In Chicago, CME spot nonfat dry milk (NDM) reached a fresh seven-year high yesterday. At today’s Global Dairy Trade (GDT) auction, skim milk powder (SMP) prices rallied for the sixth consecutive event, with all contracts finishing higher. With today’s 2.5% gain, prices have risen 14.5% since late July. The current value was slightly lower than the average auction prices set in May and early June, but it was otherwise the highest GDT price since 2014. Benchmark German SMP prices also climbed to multi- year highs.
Global demand for milk powder has exceeded expectations, while production has fallen short. In July’s Dairy: World Markets and Trade report, USDA lowered its estimate for 2021 NDM and SMP production in Europe and the United States compared to its December forecast.
USDA expects NDM/ SMP production to be just 0.7% larger for the major players combined, compared to 2020 output. At the same time, USDA expects consumption among major users to jump 3.9% this year, driven by a 41% increase in Chinese demand.
In the months since USDA’s mid-year update, NDM/SMP production has fallen even further behind year-ago volumes in the United States, and Chinese milk powder imports have remained surprisingly strong. As recent price increases suggest, global milk powder supplies will likely be even tighter than forecast, providing more opportunities for nations with a dairy surplus to move milk powder abroad.