US non-fat dry milk (NFDM) prices have continued their upward run, rising a further USD 0.08/lb compared to a week ago, a 4.53% increase. Prices are now just USD 0.055/lb below 10-year highs, according to Vesper’s latest US dairy market analysis.
The primary driver is tighter domestic supply. Lower NFDM production has pushed available volumes down at a time when demand remains firm. At the same time, the US dollar has weakened significantly, the EUR/USD peaked at 1.20 in January before falling sharply, opening global export markets more quickly for European and New Zealand suppliers, while simultaneously pushing US-priced products higher in relative terms.
Fonterra SMP, which tends to lag CME NFDM pricing, is currently trading at a premium of more than USD 200/mt compared to EU SMP, reflecting the divergence between US and European market conditions.
The broader milk supply picture is not adding downside pressure. German milk intake is reported up 6.7% at the start of March, French milk intake is up 5.5% year on year, and New Zealand milk solid production in February indicated 7.39% year-on-year growth. Despite this, available processing capacity in the US is being directed towards other products, keeping NFDM supply relatively constrained.
Energy costs are also a factor to watch. The Federal Reserve revised its 2026 PCE inflation forecast up to 2.7%, and the ECB projects 2.6% for the year. Higher energy costs linked to the Middle East conflict have the potential to feed into agricultural input costs and logistics over the coming months.
Looking ahead, the US cold storage report, due next week, will be closely watched. The previous report sent US butter markets sharply higher. With stocks remaining at low levels, the outcome could be a significant price signal for the broader US dairy complex.
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