The latest Global Dairy Trade (GDT) event has delivered unexpectedly bullish results across all major dairy categories, contrasting sharply with downward pressure in European and US markets as both regions enter peak milk production season. According to Vesper’s latest market analysis, this divergence is creating a complex global dairy landscape for industry players to navigate.

GDT results defy seasonal expectations

Tuesday’s GDT trading event (May 6, 2025) saw significant price increases across all major product categories:

  • WMP prices skyrocketed to $4,470/mt for Contract 2, jumping $365/mt (8.9%) from the previous event
  • SMP reached $2,990/mt, returning to price levels not consistently seen since Q4 2022
  • Butter traded at an average of $8,050/mt, demonstrating robust global demand for milkfat

“The main driver for the increase in NZ WMP was the limited volume on offer at the end of the 24/25 season, which still triggered a lot of demand,” notes Vesper’s May 7 analysis.

European and US markets feel flush pressure

While Oceania prices surge due to seasonal supply constraints, European and US markets are beginning to feel downward pressure from peak milk production:

  • Butter: European prices have fallen to €7,100/mt ($8,052/mt) as cream prices drop to approximately €7,800/mt throughout Germany and Benelux regions
  • SMP: Despite flush pressure, European prices have increased slightly to €2,350/mt ($2,665/mt), with recent ONIL tender closing at $2,940-2,950/mt CFR for delivery in July-October
  • WMP: European prices remain steady at €4,300/mt ($4,876/mt), significantly higher than global alternatives

The contrast between regions is particularly evident in butter, where European prices (€7,100/mt) maintain a 59% premium over US butter (€4,471/mt).

Strategic implications for Q2 and Q3

The current market dynamics present both challenges and opportunities for industry participants:

  • Production Economics: With European skim milk concentrate trading at €1,600/mt, SMP production costs have decreased to approximately €2,100/mt, creating healthy margins for producers
  • Regional Arbitrage: Latin American WMP (currently at $4,350/mt) has become the world’s most competitive source, undercutting both European and Oceanian options
  • Q3 Planning: While current fundamentals point toward lower prices, strong demand and limited stocks are providing price support across most categories

“While fundamentals point towards lower prices and liquids are already leading the way, there is too much demand and too little stock available to really push down prices,” explains Jasper Endlich, Vesper’s Dairy Analyst.

What’s next for global dairy markets?

The outlook varies significantly by product and region:

  • Butter: Despite flush pressure, strong global demand and limited stocks should prevent significant price decreases
  • SMP: Global prices have strengthened slightly, primarily driven by New Zealand’s seasonal decline, though abundant European and US supply limits upside potential
  • WMP: With New Zealand’s production season ending, markets are expected to remain stable rather than face shortages

Access the full week 19 market analysis on Butter, SMP, WMP on the Vesper platform here: https://app.vespertool.com/market-analysis/1917