Dairy markets show diverging trends in late March

The global dairy market is currently experiencing contrasting dynamics across key product categories, with butter showing remarkable resilience while milk powder markets face ongoing challenges.

Butter market remains active despite price adjustments

European butter prices have adjusted downward this week, with prices easing by €100-200/mt. Despite this reduction, buyer interest remains exceptionally strong, with producers reporting that contracts for the entire year were secured “within the blink of an eye.”

The current market environment for butter is influenced by multiple factors, including:

  • Volatile cream prices
  • High milk fat content in European production
  • Decreased herd sizes
  • Complex trade dynamics between US and EU markets
  • Changing consumer behaviors

Industry experts anticipate the European milk flush to begin in mid-April, which may bring additional milk fat to the market. Meanwhile, US butterfat products are increasingly entering European supply chains at competitive price points, creating a more complex international market dynamic.

Milk powder markets face demand challenges

In stark contrast to butter, skim milk powder (SMP) markets are struggling across all major exporting regions. Global demand remains subdued, with recent price reductions only triggering limited buying interest.

The powder market is currently contending with:

  • Sharp exchange rate fluctuations
  • Intense global competition
  • Seasonal production shifts in Oceania
  • Improving milk production numbers in Europe

While current SMP prices align with many buyers’ 2025 budgets established late last year, overall demand remains insufficient to prevent continued downward pressure.

Whole milk powder (WMP) closely follows butter market movements, with prices adjusting accordingly this week. The significant price differential between European and Oceanian WMP continues to influence market dynamics, though this gap has narrowed somewhat in recent trading.

Market outlook

Industry analysts suggest butter markets may test current support levels once European milk production improves from mid-April onward, though multiple factors could influence this trajectory.

For milk powders, while global demand remains weak, there appears to be just enough buying interest to prevent prices from declining dramatically beyond current levels. Exchange rates continue to play a crucial role in short-term market movements.

As dairy commodity markets navigate these complex dynamics, stakeholders are advised to monitor upcoming seasonal production shifts, evolving trade patterns, and macroeconomic indicators that may influence pricing in the coming weeks.

Access our full Butter, SMP, WMP market analysis here: https://app.vespertool.com/market-analysis/1818?commodity=dairy

This article provides a summary of market conditions based on Vesper’s comprehensive dairy market analysis dated March 26, 2025. For detailed pricing information and in-depth market intelligence, please contact us.