Dairy Prices Fall 4.9% as Milk Powder Supply Surges 20%

July 11, 2026

Sellers put nearly 20% more milk powder up for auction than a year ago.

Key Facts

The Global Dairy Trade price index fell 4.9% at the July 7 auction.
Whole milk powder and skim milk powder volumes offered were up almost 20% year over year.
The auction drew 148 participating bidders and 111 winning bidders.

Sellers put nearly 20% more whole milk powder and skim milk powder up for bidding at the July 7 Global Dairy Trade auction than they did a year earlier, and prices moved accordingly. The overall price index fell 4.9% to an average of US$3,793 per tonne, about NZ$6,685, according to RNZ, which reported it as the steepest single-auction decline in two years.

The result followed a 2.8% fall at the previous auction, held three weeks earlier, according to Cheese Reporter , which called it the third straight decline in the price index. The Otago Daily Times reported that the auction was the third fall since May 19, following two marginal rises in May auctions before this pair of declines.

The drop landed at the start of New Zealand's 2026/27 dairy season, which opened on June 1, and coincided with a sharp rise in the volume of milk powder sellers put up for bidding.

Whole Milk Powder and Skim Milk Powder Decline as Supply Rises

Whole milk powder, the product that carries the most weight in farmgate milk price calculations, fell 4.4% to US$3,425 per tonne. Skim milk powder dropped 7%, the larger decline of the two powder lines, according to Cheese Reporter, which put its average winning price at US$3,135 per tonne.

Volumes of whole milk powder and skim milk powder offered at the auction were up almost 20% compared with the equivalent event a year earlier, RNZ reported.

NZX dairy analyst Rosalind Crickett said the price falls were "well and truly expected," pointing to an abundant supply of dairy products meeting weaker demand. Crickett said excess milk supply had put downward pressure on both powder lines, and that the declines were heavier than she had anticipated.

The auction drew 148 participating bidders and produced 111 winning bidders, according to Cheese Reporter and the Otago Daily Times, both of which put the count at just under 150.

RNZ also reported Crickett's comments that global milk production had shown strong growth across all major producing regions in the year to date except China, where output fell 4.6% year over year. She said heatwaves across Europe, particularly in France and Belgium, had hurt productivity, with some heat-stress-related dairy cattle deaths also reported in Jersey.

Cheddar Falls Sharpest While Two Product Lines Gain

Cheddar recorded the steepest decline of the auction, falling 12.3% to an average of US$3,900 per tonne. Butter fell 5%, anhydrous milk fat slipped 3.9%, and lactose eased 3.6%.

Two product lines moved against the broader decline. Buttermilk powder rose 8.2%, and mozzarella gained 3.8% to reach US$3,897 per tonne, according to Cheese Reporter.

Global dairy prices fell 4.9% at the July 7 auction as sellers offered nearly 20% more milk powder than a year earlier.

Six of eight products fell at the July 7 auction. Cheddar posted the steepest decline at 12.3%, followed by skim milk powder at 7% and butter at 5%. Whole milk powder, the product with the most weight in farmgate price calculations, fell 4.4%. Buttermilk powder and mozzarella were the only two lines to rise, up 8.2% and 3.8% respectively, gains too small in volume to offset the broader decline.

What the Decline Means for Fonterra's 2026/27 Forecast

The auction's timing, at the opening of the new season, is why it matters beyond this one result. Fonterra, the New Zealand dairy cooperative whose sales run through the fortnightly GDT auctions, announced an opening forecast farmgate milk price of $9.75 per kilogram of milk solids for the 2026/27 season, within a range of $8.00 to $11.00.

A run of soft auctions this early in the season can begin to weigh on the upper end of that range.

Market participants will be watching the next fortnightly trading event to determine whether the decline represents the start of a longer slide or a one-time clearing of seasonal supply. A return of stronger Chinese import demand, the largest global buyer of whole milk powder, is seen as the main factor that could firm prices again.