Global Dairy Trade: Demand up despite tariffs and trade uncertainty

One country is buying up dairy, despite America’s trade tariff uncertainty. Here’s the latest on the international milk market.

Global trade uncertainty has failed to dent international dairy demand, with a lift in a key index adding weight to farmer calls for a farmgate fill-up.

The headline figure in this week’s Global Dairy Trade trading session posted a modest gain of 1.1 per cent to reach $US4250 ($A6780) per tonne.

The whole milk powder category hardly moved with an 0.1 per cent dip to $US4062 ($A6480) per tonne while skim milk powder clocked the largest increase, up 5.9 per cent to an average of $US2876 ($A4588) per tonne.

Australian Dairy Farmers president Ben Bennett said this week’s positive trading session was remarkable given the worldwide instability posed by American tariffs.

The southwest Victorian farmer said processors needed to reflect market reality and “meaningfully increase what they pay to farmers”.

“It needs to be a meaningful increase, not these 10 cent, 20 cent so-called step ups. Clearly there’s strong demand for milk and we’ve seen remarkable strength in the dairy market internationally, given the instability of trade with concerns over tariffs,” he said.

Last month, Lactalis became one of the final processors to provide a step up, offering $8.55 per kilo milk solids in northern Victoria and $8.40 per kilo milk solids in southern Victoria as well as Tasmania.

Fonterra has committed to a price review sometime this month while rivals Bega and Saputo have kept their prices around the $8.30 per kilo milk solids range, with all three raising their offerings in the weeks leading up to Christmas.

Gippsland farmer Nicole Saunders said while the GDT didn’t provide an exact guide to domestic dairy conditions, it remained a good indicator for the Australian farmgate.

“At the moment, the milk price doesn’t reflect where the market is at,” the Tinamba farmer said. “We’re very positive about the dairy industry, it has great potential, it’s innovative and really rewarding generally — but you also need to be financially rewarding, like any business.”

The headline figure on the Global Dairy Trade index rose for the first week in April. Picture: Zoe Phillips

The stable GDT numbers run counter to other agricultural commodity indices in recent days as markets the world over braced for US President Donald Trump’s sweeping tariff announcement on Thursday.

Fonterra chief innovation officer Komal Mistry-Mehta said the latest GDT session was surprisingly strong, with China one of the key buyers.

“It’s really pleasing to see a positive result, (especially) with whole milk powder still around the $US4000 mark,” she said.

“There was a great representation from China but overall good representation (from a range of buying nations).”

Mr Bennett said like many in Australian agriculture, he had a “wait and see” approach to the US tariff announcement.

The Trump administration will impose a 10 per cent tariff on all Australian goods, with Prime Minister Anthony Albanese ruling out retaliatory trade barriers.

“We send about $A60m worth of dairy to the US and they send us about $A250m in return. “They’re getting a pretty good deal, whether they realise that is another question.”