Welcome back to Let’s Chat Dairy by HighGround Dairy! HighGround’s Cara Murphy and Stu Davison discuss the past week in dairy markets and summarize recent reports and relevant news. The podcast can be found here on our dashboard or wherever you listen to podcasts. Subscribe so that you never miss an episode!
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Transcript:
(0:14) Cara Murphy:
Hello, and welcome back to another episode of Let’s Chat Dairy, your weekly market podcast powered by HighGround Dairy. Today you’re hearing from Cara Murphy and Stu Davison. What a week it’s been! We had a fantastic time seeing many of you at the ADPI Conference here in Chicago this week. It’s always great to get a finger on the pulse of the dairy markets, see what’s new, what’s changed, and most importantly, what topics are hot and in demand. We’ll kick off today with the CME Spot Market Recap, then get into all the juicy details.
Blocks closed this week at $1.64 per pound with 11 trades in total. Barrels closed at $1.6150 with 0 trades this week. Butter ended at $1.5950 per pound with 92 trades on the week. Dry whey closed at $0.6975 per pound with 3 trades. And nonfat dry milk closed just a quarter off the all-time high at $2.2625 per pound with 19 trades in total. That nonfat dry milk price is no joke. No wonder it was all the talk of the town at this year’s conference.
(1:18) Stu Davison:
Yeah, that’s right, Cara. With the CME Spot price marking new record highs, while the New Zealand and European skim milk powder prices struggle a little bit, everyone wants to know what is going on. We can’t say everything here, but I will mention just this week, Ghirardelli issued a voluntary recall of 12 specific powdered beverage mixes after a supplier reported a potential Salmonella risk in their milk powder. This event comes on the heels of another voluntary recall involving milk powder in Costco pre-made meals, as well as several infant formula recalls announced back in February.
(1:49) Cara:
Well, now that is really interesting. That could certainly take a chunk of available supplies of milk powder out of the market. And to me, I think about how in 2025, the US made very little nonfat dry milk powder. Then, couple that with the stockpiles being not terrible—but certainly not robust—this is starting to make sense why it feels like the supply side of the market is where the bottleneck is.
(2:12) Stu:
Yeah, we are unsure of the full amount and believe me, there was a lot of speculation this week at the conference, especially around how much powder has actually been recalled. But it’s all part of the puzzle that is starting to come together.
(2:23) Cara:
Agreed. Now I have a question on the international side here. Following this week’s GDT Pulse event, then looking at the EEX figures printed on Wednesday, it appears European skim milk powder is once again in demand. But Kiwi skim milk powder is meeting some resistance. What do you think is going on here? And do you think this trend will last at the GDT event coming this Tuesday on May 5th?
(2:44) Stu:
Yeah, we definitely are seeing some resistance for Kiwi product at current levels. A big part of that is the inability for Kiwi and European product to be exported into the US and replace the non-fat dry milk that is driving a lot of the squeeze here. So we’ll keep an eye on that.
We have seen a reshuffling of offer volumes from Fonterra for next week’s GDT, with whole milk powder and skim milk powder volumes changed. 2,000MT of whole milk powder was added to the 12-month forecast, however this does not affect next week’s auction. It does reshuffle volumes through the July and September period, with reductions in the October through January period. So, while there was 2,000MT added, large volumes were shifted within that time frame. Likewise, skim milk powder offer volumes were increased by 2,185MT across the 12-month forecast, and alike to the whole milk powder outlook, the reshuffling was across the curve. There’s more volume in the first half of ‘27 and less in the nearer months.
For the auction next week, the SGX futures are picking a split outcome again, with powders expected to lift, while milk fats are expected to dip again following the last two auctions. While there are some wider concerns in the market around foot-and-mouth in China, we haven’t seen any new news from the Chinese government on that front. That is contrasted against strong imports and purchases so far by that nation year-to-date. So, we are contrasting good demand from China with strong milk production, and we’re suggesting that there will likely be a supported view for the GDT auction next week. We’ll wait and see.
(4:15) Cara:
Alright, staying in the Asia-Pacific region of the world, this week we also released our Asia Dairy Trade Report, which covers seven nations in the Asia-Pacific region: South Korea, Japan, Indonesia, the Philippines, Malaysia, Thailand, and Vietnam. The report is fascinating as we dive into their import data for top dairy commodities. Malaysian skim milk powder imports were way up, but whole milk powder is way down. Meanwhile, South Korea is on a butter kick, and Thailand is bringing in tons of casein in March. This report is definitely worth checking out and is available to subscribers on the dashboard. But one thing we also provide is a brief update on significant macroeconomic changes to these nations as well as trade policy. With all the tariffs and trade deals between the US and Southeast Asia last year, we certainly covered those, but now the energy crisis due to the conflict in the Middle East is threatening inflationary pressures and providing macroeconomic headwinds.
(5:11) Stu:
In that vein, Cara, I saw that the Japanese yen was up quite a bit yesterday after the government intervened. What’s going on there?
(5:17) Cara:
Exactly. Another such item we touch on in this report this month is Japan’s focus on energy, which is why we’re seeing the change in their currency. The nation is incredibly dependent on fuel imports, and they said they are already releasing strategic energy reserves. At the same time, Japan is overhauling its defense export rules and investing more in defense overall. This is the first time we’ve seen Japan make moves this large, considering defense, since World War II, as tensions in the region heat up primarily with China. We also talked the Philippines running military drills near the South China Sea to China’s dismay, but both Japan and the Philippines are independent on fuel imports. While Japan has nearly a year of fuel reserves, the Philippines does not, and on the other hand, China has a hefty stockpile. If the global energy crisis persists, this could give China greater leverage over these nations, which is something China has proven it will take advantage of, as the nation propositioned Taiwan with energy access if Taiwan accepts Chinese rule. There are machinations afoot in this part of the world, ones that could change purchasing power, imports, and foreign policy. So we’ll keep a close eye on that, and check out that report, again, available to subscribers on the High Ground Dairy website.
Well, that’s all for today. We’ll keep it short and sweet. We hope everyone has a lovely May weekend. Spring is in the air, enjoy it, get outside if you can, and we’ll see you next time on Let’s Chat Dairy. Cheers!
