2024 in review: lessons, challenges, and the future of Dairy [250th Edition of the DAIRY Newsletter]

Welcome Partners!

Welcome back to our newsletter!

We’re back with a game-changing new look and the ultimate recap of a turbulent 2024 that reshaped the global dairy industry. From shifting price dynamics and the impact of climate change to breakthroughs in sustainability and innovation, this newsletter captures it all. Plus, we’ll dive into the latest market updates on milk powders, cheese, fats, liquids, and whey powders to keep you ahead of the curve. Buckle up for insights that matter!

Let’s take a look at what’s been happening in the dairy market lately!

Milk powder

Skimmed milk powder (SMP) prices remain stable or show a slight increase, oscillating in the range of 2500-2650 EUR/MT. Demand for fresh SMP in the European Union remains moderate, while export transactions to Algeria are being realised at around 2500 EUR/MT FCA. Two weeks after the end of the festive period, the market for this commodity has re-activated, with a noticeable increase in trading activity and renewed demand in both the domestic and export markets. Feed grade SMP prices have fallen to 2450-2500 EUR/MT for Q1 delivery.

Cheese

The cheese markets are also under pressure. Gouda prices have fallen to 4200-4300 EUR/MT FCA, driven by weak final demand and declines in butter prices. Although stock levels are not excessive, downward pressure on prices continues. Similarly, mozzarella prices have fallen to 3850 EUR/MT FCA due to oversupply and a seasonal reduction in consumption. Producers are trying to reduce production to stabilise the market. After two weeks, cagliata cheese prices are stabilising, currently at 4400-4550 EUR/MT. Meanwhile, emmental prices remain higher – around 5200 EUR/MT FCA – thanks to limited supply and stable demand. However, increased milk processing could lead to price falls later in the year.

Fats

Butter prices fell to 6700-6900 EUR/MT for Q1 contracts, while December deliveries were made at higher prices of 7300-7400 EUR/MT. These decreases are due to a seasonal increase in milk production and a decrease in cream prices. These trends were evident last week, but we are now seeing a reactivation of the market, resulting in a slight increase in demand.

The anhydrous milk fat (AMF) market remains stable, with prices in the 9000-9200 EUR/MT range, although further declines are expected in January. Strong export demand, particularly from the confectionery sector, is easing market pressure.

Liquids

Spot prices for cream fell to 8500-9000 EUR/MT FCA, with transactions below 9000 EUR/MT seen over the Christmas period. The increase in milk production has increased supply, putting additional pressure on prices, which could fall below 8500 EUR/MT in January. Tomorrow’s market trends should provide more information on cream availability and future prices.

During the Christmas period, skimmed milk concentrate (SMC) traded at 1900-2000 EUR/MT FCA Germany, with offers below 1900 EUR/MT, indicating temporary weakness in this segment. However, a recovery is expected after Christmas, with prices expected to stabilise in the 2000-2100 EUR/MT range in the coming weeks.

The seasonal increase in milk production is increasing availability, which could lead to further price drops below 8500-9000 EUR/MT in January.

Whey powder

In the whey market, premium products such as whey protein isolates (WPI) and whey protein concentrates (WPC 80) are maintaining high price levels with 18500-19500 EUR/MT and 10800-11000 EUR/MT respectively. Strong demand and limited availability in this category favour price stability. Food grade sweet whey powder costs between 930-1000 EUR/MT, while feed grade SWP remains stable at 880-930 EUR/MT DAP NL. Reduced cheese production has reduced the supply of whey, which has affected price stability. Nevertheless, further changes in cheese production may bring further price adjustments in the coming months.

What shaped the dairy market in 2024?

The year 2024 brought a number of significant challenges and changes to the global dairy market, which significantly affected the performance of the industry. One of the most important trends was the volatility of milk and dairy prices. The beginning of the year was characterized by price declines, particularly in exporting countries such as New Zealand and Australia, where overproduction and weakening demand in China created downward pressure. At the same time, in markets such as Europe and the US, butter prices rose to record levels, fuelled by growing demand for dairy fats and premium products.

Climate change was another major factor that shaped the market. Droughts in Australia and the US reduced feed availability and lowered milk yields, while extreme heat in Europe had a negative impact on animal health. In South America, the El Niño phenomenon contributed to destabilizing production conditions, with both heavy rainfall and droughts disrupting supply chains.

Health challenges have put additional strain on the sector. The spread of bluetongue, particularly in Europe, has resulted in restrictions on animal transport and increased costs associated with prevention and treatment. This disease, exacerbated by climate change, has highlighted the importance of better veterinary control systems and adapting the sector to new risks.

International trade has also seen significant changes. A decline in exports to China of more than 35% due to anti-subsidy tariffs on dairy products from the European Union has forced exporters to look for new markets such as South-East Asia, the Middle East and Africa. At the same time, the EU-Mercosur trade agreement has caused controversy, increasing European producers’ concerns about competition from cheaper South American products. The US, in turn, has strengthened its trade relations with Asian countries, opening up new export opportunities.

The year was also a time of increasing sustainability and innovation in the industry. Consumers in developed countries increasingly chose products from organic farms, which motivated producers to implement practices that reduce methane emissions and support regenerative agriculture. At the same time, the automation of farming and the use of advanced data analytics have allowed many producers to increase efficiency and better manage resources.

In summary, 2024 has been a year of dynamic change for the global dairy market, which has demonstrated the challenges of price volatility, climate change and international trade disruption. At the same time, the sector demonstrated its ability to adapt by innovating and developing sustainable production strategies. The year ahead, 2025, promises to be equally challenging, particularly in the context of consumer expectations, climate change and further trade tensions.