Global dairy prices see their 8th decline in a row overnight
Wednesday, 3 December 2025
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The Global Dairy Trade auction held last night (NZ time) has seen prices for milk, butter and cheese fall for the eighth consecutive time, down to near two-year lows.
The news comes a week after Fonterra and Synlait cut their milk forecasts in the wake of strong global supply putting downward pressure on prices, which have dropped more than 18% since their peak in May this year.
At last night’s GDT auction, prices fell 4.03% to an average winning price of US$3507 (NZ$6122) per metric tonne. Most categories saw falls - whole milk powder, New Zealand’s biggest export, lost 2.4% to US$3364/MT. Another key export, butter, had the biggest drop, falling 12.4% to US$5169/MT, while one of the few gainers was cheddar, which rose 7.2% to US$4639/MT, but is a small category of product.
GDT trading events are held twice a month, and there is one more in the year.
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Fonterra
On November 25, Fonterra narrowed its forecast farmgate milk price range from $9.00-$11.00 per kgMS, to $9.00-$10.00 per kgMS, with the midpoint changing from $10.00 per kgMS to $9.50 per kgMS.
CEO Miles Hurrell pointed out that Fonterra started the season with a wide forecast range of $8.00-$11.00 per kgMS, and the new midpoint of $9.50 per kgMS was in the middle of the range and remained “a strong forecast for the season.
“We continue to be focused on maximising returns for farmer shareholders through both the Farmgate Milk Price and earnings. This includes through building strong relationships with customers who value our products, utilising price risk management tools, and optimising our product mix.”
Synlait Milk updated its forecast base milk price two days later, to $9.50 per kgMS, decreased from $10.00 per kgMS, excluding additional incentives it pays for best practice or speciality milks.
The globally strong supply of milk that is causing the downward revision of farmgate prices is unlikely to reverse course any time soon. The OECD says global milk production will grow 1.8% each year out to 2034, with smaller growth in developed markets but much bigger growth in those developing.
For example, Pakistan, the fourth biggest milk producer in the world, has seen its production grow threefold in three decades and that is set to continue, while Indian milk production is likely to grow at a rate of 3.6% each year between 2025 and 2034, the highest growth forecast for any country in the global market.
Beef
In contrast to dairy, global beef supply has started to tighten, and with further contraction expected in 2026, the outlook for beef prices remains strong, according to Rabobank’s Q4 Global Beef Quarterly report.
The contraction is small - by 0.8% year-on-year in 2025 - but is led by a dip in US volumes. The EU, UK and Canada were also expected to register lower production, while New Zealand’s own production was tipped to drop by 34,000 metric tons, or around 5%.
A further global beef production contraction of about 3.1% is forecast for next year as well.
While prices are nearing a record high for New Zealand cattle - at more than $9.00/kg over spring they’re up as much as 40% year-on-year - Rabobank’s RaboResearch senior animal proteins analyst Jen Corkran said the fall in New Zealand beef production volumes this year had somewhat limited the ability of beef producers to fully capitalise on higher export prices.
But export demand for Kiwi beef remained robust, with the US market taking 41% of New Zealand’s beef exports in the calendar year through to the end of September, despite overall export volumes being lower.
“Stronger US demand and higher import prices have driven export values to the second-highest level on record, just over $3.8 billion, even as volumes trail the record-high 2022 by 7%,” she said.
China’s share of exports dropped to 26%, while Canada and the UK have seen modest gain from low levels.