This week on Chart Chatter, Kathleen and Vuko break down major shifts in global dairy markets from opposite sides of the world. U.S. milk cow numbers are at their highest since the 1990s, butter prices have collapsed to multi-year lows, and New Zealand milk production is off to a roaring start. Meanwhile, China shows mixed signals—importing more whole milk powder while exporting cheap supplies abroad. Tune in for sharp insights on what these trends mean for Class III & IV prices, trade flows, and the outlook heading into late 2025.
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Future trading involves risk and is not suitable for all investors. Content provided in this segment is meant for educational purposes and is not a solicitation to buy or sell commodities.
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Welcome to chart chatter, spend ten minutes with two colleagues into wildly different time zones to nerd out on global dairy market charts. I’m Kathleen, market intelligence director at Everitt Insights in the US, and.
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I am senior analyst with Ever Again Sites in Melbourne, Australia.
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And together we’re the hosts of Chart Chatter luego. It’s 5 p.m. in Buffalo on September 24th at 7:00 am in Melbourne on September 25th. How’s your morning going?
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Fantastic. So far. What’s happening in the markets this week? I’m excited to wake up to the news every morning. I see the butter prices collapsed again in the US. We’re probably touching new multi year lows. We have a very exciting week in terms of data updates, would you like to kick things off with the US Milk production report?
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We’ll go. It has been a really exciting start to the week here in the US in particular, starting with Monday’s USDA Milk Production report for August, which showed how numbers up to 9.52 million head in August. That was up 10,000 head from July. But if you look at some of the adjustments that USDA made to the July figures, cow numbers actually gained 25,000 head from report to report.
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So pretty big, pretty massive increase in in overall cow numbers. And guess what Bilko?
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Whatever.
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I don’t know what years Vuko was in elementary school, but these are the highest cow numbers going back to 1993. At that point in time, USDA was only showing annual or only providing annual data, but still the highest cow numbers in the US since the 1990s. And we’ve talked at length about what’s driving some of the increasing cow numbers.
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To me, it’s in part driven by the beef on dairy dynamics, where we’re keeping more cows here in in US dairy, hers to get a calf on the back end. Those calves are very high valued. And hey, guess what? In the dairy industry were a lot of uteruses available to repopulate the beef herd, or at least keep beef production growing.
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Not to bury the lead either, but us milk production for August did increase 3.2% year over year. That was slightly above expectations.
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When I looked at the data, what caught my eye was that we now have nearly 200,000 cows more compared to 14 months ago. How did the markets react to this update?
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You know what’s funny is that on the class three side of this things, the market didn’t really react in the way that I would have expected. We read this report is squarely bearish. Class three on Tuesday moved a little bit higher on the class four side of things, though, it continued the trend lower with with the class four complex, both powders and butter stepping notably lower.
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Bogo US wasn’t the only one to publish milk production data here this week. Tell me about what happened with New Zealand’s milk production.
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Yeah. New Zealand also published their August results earlier in the week. They had a very, very strong start to the 20 2526 season. It’s better than expected. Milk production increased 2.5% for the month. And given how high the comparable saw from last year, I think these numbers are surprising many in the industry. So definitely another bearish for prices.
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Milk production report. New Zealand has actually hit four months in a row now that they have broken historical records and their pasture conditions are very good. Milk price are profitable. They’re retaining cows and they have very good supplementary feed. So going ahead I think we will see another growth season in 2526. And that will be on top of a very big 2425 season.
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What do you think is the biggest driver? Is it weather? Is it we’re holding on to more cows in New Zealand. Is it peak type imports? All of the above.
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I will say it’s all of the above. It’s kind of a perfect storm. And I think if you talk to people, a few months ago, they probably wouldn’t have agreed that New Zealand would be growing this early in the season. But again, this means we are more than 4% up in the first three months. So it’s a very positive milk production report out of New Zealand.
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Shifting gears, let’s talk about China. China August imports increased 2% year over year on a milk solids equivalent basis. Digging into the whole milk powder trade data specifically, we did see a pick up in Omo powder imports into China in August with 30,500 metric tonnes imported. That was actually up 55% year over year. Looking at a 12 month rolling average basis, volume of Homo powder imports was actually about 7% ahead of prior levels.
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So on paper vehicle, this would seem to suggest that China’s buying a little bit more. But I think we need to look at the full picture. Omo powder exports actually increased nearly 20% year over year. Little more than 5000 tonnes moved out of the country. But as we look at it on a year to date basis, three times more Omo powder shipped out of China in 2025 versus 2024 through August.
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Where’d that powder go? Venezuela, Nigeria? Bangladesh was also on the list, so there’s some pretty cheap homo powder moving out of China, in addition to high quality homo powder from places like New Zealand moving in.
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Yeah, they’re just another sign that their local market is oversupplied. Right. So in the last 12 months, they shipped more than 4000 tonnes of home powder into other markets, it below global market pricing. So we just tells you how bearish the import demand for Chinese.
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Yeah the skim on powder numbers were down pretty substantially as well. So Omo powder up a little bit. But in general their overall imports were kind of fair to middling. Let’s talk about New Zealand exports. What did you see there in the data.
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There was New Zealand data is always a leading indicator of of Chinese demand. So New Zealand published their own August exports earlier in the week. And it was a big growth month overall. In mutual it’s equivalent to estimate they increase their shipments by about 20% from powder, increased 31% overall in shipments to China alone of whole milk, or up 13%.
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As you can see in the chart, there is growth during July August. But keep in mind, the prior year comparables were particularly low. But I wouldn’t take this as a very bullish market signal for home border pricing.
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So, Vuko, as we think about GDP, any insights on where we might see GDP move?
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Yeah, we’ll do the China, you know, sort of a poor performance on the previous event in new powder. But they did pretty solid in butter right. So two events in a row they took more than well close to 80% of the total volume sold for home powder. I think the outlook hasn’t really changed in our estimate. China doesn’t really have those large import demand requirements they did a number of years ago.
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So New Zealand simply has to either find alternative markets for their product or switch their product mix into skim milk powder, butter or mix or cheese, which they’ve been growing for a while.
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But to your point, we’ve seen China actively engaged GDP on the fat side of things, and we saw that exports out of New Zealand increase in August, right.
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Yeah, exactly. There’s some markets we’ve been able simply to absorb those higher prices. Another interesting thing in the data we’ve seen this year is that, New Zealand has been actually shipping game into the European Union, given how high their own prices have been. There’s definitely in that. The other interesting aspect is New Zealand is likely going to lose some market share in the Australian butter market, given how cheap the the US butter price has become.
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And I think that’s coming later this year and well into 2026, there’ll be bigger shipments of, U.S. butter into the Australian market.
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Okay. We’ll go. We’ve had two trade charts. Why don’t you round it out with a third one? Talk to me about global dairy trade. Okay.
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I think this week we published our July Trading Insights report, which looks at the top global dairy exporting countries and what they’ve done as a group. And we estimate that global trade continues to to recover milk solids. Equivalent shipments increased more than 4% in July. And as you can see in the chart, the big recovery we’ve had since the start of 2023, a lot of that has been fueled by stronger cheese.
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Three this are also increasing in some of these developed markets, such as the European Union, are able to absorb the high pricing. But on the other hand, you’ve seen milk powders struggle and some of the weakest markets. You know, our estimate is being more than African, particularly Algeria.
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So what do you think that means for 2025, late 2025 exports and beyond into 2026? Do you think that there’s opportunity for growth in global exports, or do you think that things could start to Peter out?
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I think there is more opportunity for global growth in exports given, first of all, how low prices have have come down over the past few months. Some of these price sensitive markets in the Middle East, Southeast Asia are probably going to start rebuilding inventories at the same time, another interesting thing that should be on our radar is changing market shares.
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So in products such as cheese, I would in butter, I would expect the U.S. to start taking market share away from New Zealand in the European Union. So Caitlin chart of the week. What do we have this time.
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Well we’ll go. I keep waiting to have less bearish conversations on the class four market specifically butter. But another week and yet another decline in the U.S butter price us SQM spot butter values as of Wednesday, September 24th fell to $1.62 per pound. That was down $0.19 on the week and the lowest value since August of 2021. If we see prices below a dollar 60.5, I think it will drop us to the lowest level since February of 2021, though we’ve seen again some continuation of big erosion in in those spot butter values.
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As we look at our chart of the week, looking at synthetic class three and synthetic class four values. So this is taking what’s the spot market for cheese butter, nonfat dairy milk in a way, and running it through the classified pricing formula to spit out. What’s your class three and class four price. And as of today’s prices, we’re looking at synthetic class four values below $14 100 weight class three values that are sitting around this $16 400 weight mark.
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And they’ve kind of been treading water there as we’ve seen these butter prices move lower. That class four value has has incited substantial pressure. Think about the spot butter market. Every penny move is about 4 to $0.05 of movement in the class four space. So given the fact that we’ve taken, I don’t know, almost a dollar out of the the butter market here in the last 8 to 10 weeks from 260 down to 162, it’s no surprise that we’ve seen the synthetic class four value fall from $19 range to sub 14.
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From a producer perspective, definitely a lot of questions here on what day margins look like, how it might impact those cow numbers that we talked about to start the call today. And what’s the next move to folks start to call a few more animals because the margins are starting to get tight. But at this point in time, producers have in the US have not necessarily seen a bad milk check.
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So my thought is it always takes longer than we think to see any sort of notable change in milk supplies. All right. We’ll go this. Okay. So this is a new video series, right, Vuko? I mean, we’re we’re at three, four weeks into this. And one thing that I noticed as we were talking today is that I say data.
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You say data, and we need to know from the listeners, what do you prefer? Should I start saying data? Should buko start saying data? I don’t know is a Google is from Western New York and have as Hard A’s as I do, and I’m not from Eastern Europe, so data is a little tougher for me to get my mind around.
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But we need to know from the listeners, what should we say? I feel like we’re inconsistent. All right, Hugo, that’s it for chart chatter this week. A huge thanks to you for all of your data wizardry, and to Nana and the marketing team for mixing and mastering. If you’d like to learn more about how they every insights team can support your business, or if you have chart requests or have strong opinions on data versus data, please contact us at insights@ever.ag
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