It’s the start of a new year for global dairy markets and the outlook is generally positive. Global milk production for 2020 is forecast to show very modest growth of less than 1%, while demand looks robust, mostly due to strong export demand from Asian markets.

The second half of 2019 saw really strong demand from Asia, with China in particular hoovering up a lot of dairy products off the world market in the runup to Christmas. Whether Chinese buyers have been stockpiling product for the year ahead and demand will slow down remains to be seen, but the next few months will tell a lot.

January is a key month for Chinese dairy imports. The free trade agreement between China and New Zealand allows for tariff-free dairy exports in January and the volume of dairy traded between the two countries usually soars in this four-week period.

Based on the result of this week’s GDT auction in New Zealand, it would appear demand is strong. Average dairy prices jumped 3% at this week’s GDT, with healthy growth in the price of milk powders leading the way.

Average prices for whole milk powder (WMP) increased 2% to hit $3,150/t (€2,830/t), while the price of skimmed milk powder (SMP) soared over 5% to break the $3,000/t (€2,700/t) mark.

On the fats side, butter prices increased 4% above $4,000/t (€3,595/t), while butter milk powder prices jumped 7% to $3,040/t (€2,730/t). The price of cheddar increased 4% above $4,000/t (€3,595/t).