The FAO Dairy Price Index averaged 120.9 points in March, registering a modest increase of 1.5 points (1.2%)—marking the first upward movement since July 2025. However, despite this recovery, the index remains significantly lower—down 27.8 points (18.7%) compared to the same period last year—indicating that global dairy markets are still navigating a broader correction phase.

The recovery in March was largely driven by firming prices of skim milk powder (SMP), whole milk powder (WMP), and butter. Notably, SMP and WMP have now sustained an upward trajectory since January, reflecting steady global import demand coupled with tightening supply conditions. A key contributing factor has been the seasonal decline in milk production across Oceania, where output has moved past its annual peak, thereby constraining export availability.

Butter prices also edged higher during the month, with a more pronounced increase observed in Oceania. This trend is primarily attributed to tightening milk fat availability, which has started to impact global supply balances. In contrast, the European Union witnessed only moderate gains in butter prices, as relatively comfortable cream supplies—supported by improving seasonal milk flows—helped contain sharper price escalation.

On the other hand, the cheese segment continued to exert downward pressure on the overall index. International cheese prices declined further, particularly in the European Union, where higher milk availability has translated into increased cheese production. This, combined with subdued export demand, has weighed on market sentiment and pricing. Interestingly, Oceania presented a contrasting picture, with cheese prices firming on the back of tighter supply and relatively stable demand conditions.

From a trade perspective, the divergence between powder-fat markets and cheese highlights an evolving global demand pattern. While bulk dairy commodities such as SMP and WMP are witnessing renewed buying interest—likely from import-dependent regions managing inventory cycles—the cheese market appears to be grappling with demand-side inertia, especially in key exporting regions.

In essence, March signals the beginning of a potential stabilization phase in global dairy markets. However, the recovery remains uneven and fragile, with supply-side seasonality in Oceania and demand variability across product categories continuing to shape price movements in the near term.

Source : Dairynews7x7 April 3rd 2026 FAO

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