Episode 68 - Dairy market update: Supply growth, tariff impacts, and consumer demand

In this episode, Sheryl Haitana speaks with Cristina Alvarado, Head of Dairy Insights at NZX, and Stu Davison, Analyst at HighGround Dairy. Cristina outlines the factors behind strong global dairy prices, including tight supply and steady demand from China and Southeast Asia, while Stu highlights forecasted milk production growth driven by the US, Argentina, and New Zealand. 

They discuss uncertainties around Chinese demand, emerging markets like Nigeria, and the impact of upcoming tariff decisions. Together, they provide a concise outlook on key trends shaping the dairy market in 2025.

 

Guests:

1. Cristina Alvarado, Head of Dairy Insights, NZX
2. Stu Davison, Analyst, HighGround Dairy

Hosts:

1. Sheryl Haitana, Editor, Dairy Exporter
2. Anne Lee, Deputy Editor, Dairy Exporter

 

Cristina Alvarado, Head of Dairy Insights at NZX, outlines the key factors underpinning the recent strength in global dairy prices, including reduced product availability and consistent demand – particularly from China and Southeast Asia. Lower milk production in major regions such as Europe, alongside continued disruption to shipping routes following the Suez Canal conflict, has reinforced demand for New Zealand and European dairy products.

Cristina explains that the legacy of previous tariffs is still influencing buying decisions, with some countries preferring to source from markets perceived as more stable trade partners. In the United States, dairy producers are facing fresh challenges around herd replacement, as older cows are culled and heifers are redirected into beef production due to better returns.

Looking ahead, Cristina expects global product volumes to remain tight through July, with increased supply likely from August onwards as seasonal production ramps up. However, she cautions that the market remains sensitive to developments such as the upcoming July tariff decision and delayed stock data from China.

Despite some recent volatility, dairy futures are tracking positively, with the 2025 – 26 milk price contract recently closing at $9.93 – just shy of the $10 mark. Cristina sees a mood of cautious optimism in the market but emphasises that global supply dynamics and consumer demand will continue to drive pricing in the months ahead.

 

Stu Davison, Analyst at HighGround Dairy, outlines key global dairy trends heading into the second half of 2025. Global milk production is forecast to grow by around 1.5%, led by stronger output from the US, Argentina, and New Zealand. In New Zealand, a favourable milk price outlook and improved reproductive performance are expected to support a strong spring peak. Meanwhile, Europe is seeing higher milk solids output despite flat volumes, driven by efficiency gains as farmers focus on feeding and breeding for solids.

Stu notes that global trade dynamics remain uncertain. China continues to be a key watchpoint, with low domestic milk prices, declining production, and rising exports of whole milk powder. Limited access to reliable economic data raises questions about the strength of Chinese demand. In Southeast Asia, government stimulus – particularly in Indonesia – is driving increased dairy imports, though its sustainability is unclear.

Emerging markets like Nigeria are showing promising growth, with rising dairy imports despite high inflation. Tariff developments are also top of mind, particularly around US-EU trade, which could influence buying patterns.

While global demand is holding firm and dairy futures remain positive, Stu cautions that ongoing geopolitical risks and changing consumption trends will be key to market performance in the months ahead.

 

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