Insight Focus
Dairy powder markets strengthen as supplies remain tight. US milk production rose in July as a larger herd boosted output, although growth in cow numbers may be starting to level off. Tight supplies and strong demand pushed NDM, buttermilk powder, lactose and WPC prices higher, while new Canadian tariffs on US dairy ingredients added uncertainty to an already constrained market.
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Dairy product prices were mixed this week. The dry complex moved higher, a trend analysts expect to persist over the next few months.
Growing Herd Drives US Milk Production Higher
US milk production increased 2.2% year on year in July to 20.1 billion lbs, according to the USDA’s August 21 report.
Source: USDA
Growth came largely from a larger dairy herd, which expanded by 199,000 head to 9.71 million cows, while production per cow edged up by just 3 lbs to 2,075 lbs.
Source: USDA
The national herd was unchanged from June, suggesting the recent expansion in cow numbers may be levelling off.
Competition for Limited Supplies Lifts NDM Prices
Nonfat dry milk (NDM) built on the previous week’s gains as buyers competed for tight nearby supplies. Central and East low- and medium-heat values rose for a third straight week, and the Grade A NDM weekly average jumped 22c.
School bottling has pulled more milk into Class I use, leaving less available for drying. Western sellers reported strong domestic and international interest, coupled with extremely scarce spot availability. Some producers were behind on low-heat output and were sold out through October on high-heat product. Suppliers were prioritising orders from Mexican and domestic buyers.
Supply Constraints Drive Strength Across Dairy Powder Markets
Other dairy powders also strengthened. Buttermilk powder prices rose on tight inventories and holiday baking demand, with some feed users switching from higher-priced NDM.
Source: Global Dairy Trade
Dry whey was mixed across regions, while output remained limited as processors prioritised higher-value whey protein products.
Lactose was among the tightest markets. Purchases outpaced production, and some manufacturers reported virtually no available inventory. Values pushed higher at the top of the range and stood roughly 20c above year-ago levels.
Whey protein concentrate (WPC) 34% faced similar supply pressure. Inventories were exceptionally thin amid strong demand from food, infant formula, and feed buyers.
Canadian Tariffs Add Uncertainty
Trade added another source of uncertainty. Canadian tariffs on US milk powders and WPC are set at 50%, prompting concern among Canadian buyers.
The duties could alter export flows at a time when several US dairy ingredients are already difficult to source.
