International Dairy Prices

In recent years dairy markets have become increasingly globalized. It is no longer sufficient to consider only domestic markets when thinking about factors that affect prices paid to U.S. dairy farmers. One must also consider international markets.

With that in mind, one resource for tracking international dairy prices is globalDairyTrade. This Internet-based electronic trading system for commodity dairy products was launched by Fonterra, the New Zealand dairy cooperative, in July 2008. I mentioned globalDairyTrade last year, but it's worth mentioning again. And it is encouraging to note that global dairy prices have improved in the past year:

The big increase in prices in 2007 and early 2008 is obvious, as is the collapse in prices in late 2008 and 2009. But prices have recovered significantly since last summer.

The quantity that is graphed above is an index calculated by Fonterra that they call gDT-TWI (globalDairyTrade-Trade Weighted Index). This index was 641 a year ago (6/02/09). The latest value (6/01/10) is 1179, an increase of 84%. However, this index has declined slightly in the last two months. The current value of 1179 is down 4% from 1232 on 4/06/10.

The original of the above graph (which may be easier to read) can be found on the Latest Results page of the globalDairyTrade web site. The Latest Results page contains links to more information on specific products, including anhydrous milk fat (AMF), skim milk powder (SMP) and whole milk powder (WMP). For even more detailed information, see the Historical Data section of the Latest Results page. This contains a link to an Excel spreadsheet with detailed data that you can view or download.