# Milk & dairy: Cycles

Spring grass, drought and Chinese buying: what moves milk prices

Source page: https://www.materialinsights.org/commodities/dairy/cycles/

What this tab covers Price history and what drives booms and busts, including this commodity's super-cycles, the drivers behind them and the metrics to track. It charts monthly prices (World Bank) with a switch to inflation-adjusted annual prices; where there is no World Bank series it uses USGS US prices.

Dairy prices are volatile because short-run supply is fixed by herd size and grass growth, while milk must be processed at once. Pasture systems have a strong spring flush in New Zealand and Europe. Feed costs, weather and Chinese import demand drive the swings. Policy shapes the cycle too, through quotas, intervention buying and US support schemes. Tilton and Guzmán's point that farm prices move mainly on supply shocks fits well (pdf p. 114).

No public benchmark price series for this commodity in the datasets used. Many minor materials trade on private contracts.

#### Super-cycles in milk & dairy

Dairy has no long super-cycle but a volatile three-to-four-year cycle in traded products. Only a small share of milk is traded, so small changes in New Zealand output or Chinese imports swing world powder and butter prices sharply, while farm milk prices in large domestic markets such as India move far less. Booms bring herd expansion, which arrives a year or two later and breaks prices. Feed costs, weather in New Zealand and policy changes such as the end of EU milk quotas in 2015 shape each cycle.

1. 2014-2015

Strong Chinese buying in 2013-14 was followed by a glut as EU quotas ended and Russia banned Western food imports; powder prices collapsed.

GDT whole milk powder averaged $2,874/t on 3 Feb 2015 even after a 19.2% one-auction jump (Rural News Group, Feb 2015)

2. 2024-2026 (US)

Record US milk output and new cheese plants pushed fat and cheese prices down, while powder firmed.

US butter $2.887/lb (2024) to $1.56/lb forecast for 2026; all-milk price $22.55/cwt (2024) to $19.90/cwt (WASDE, Oct 2026)

3. 2026 (world)

Global Dairy Trade prices recovered in mid-2026 on firmer Asian demand.

GDT event 410 (18 Aug 2026): index up 2.3%, average winning price $3,873/t (Dairy News Today)

#### What drives the cycle

- **New Zealand and EU milk output.** They supply most traded powders and butter, so weather and herd changes there set world prices.
- **Chinese import demand.** China takes about 40% of world whole milk powder imports (0.415 of 1.061 Mt in 2026, USDA PSD).
- **Feed costs.** Grain and protein meal prices set the margin in confinement systems in the US, EU and China.
- **Oil-exporter demand.** Algeria and Saudi Arabia together took 13.3% of world milk powder imports by value in 2024, and their buying follows oil revenue (UN Comtrade).
- **Policy.** Quotas, intervention buying, import tariffs and India's near-closed market shape how much milk reaches world trade.

#### Metrics to track

| Metric | Why it matters | Where to track it |
|---|---|---|
| **Global Dairy Trade price index and product prices** | Fortnightly auction prices for WMP, SMP, butter and cheese | Global Dairy Trade (GDT) event results |
| **US dairy product prices and milk price forecasts** | Monthly outlook for the largest single-country producer | USDA WASDE dairy tables |
| **World production and trade forecasts** | Twice-yearly country balance sheets | USDA FAS Dairy: World Markets and Trade |
| **EU milk deliveries and product prices** | Supply from the largest exporting bloc | European Commission Milk Market Observatory |
| **China dairy imports** | Main swing buyer of powders | China General Administration of Customs, monthly |
| **Amul and state federation procurement prices** | Farm-gate price signal in India | GCMMF and state co-operative announcements |

## Other sections

- [Summary](https://www.materialinsights.org/commodities/dairy/index.md)
- [Overview](https://www.materialinsights.org/commodities/dairy/overview/index.md)
- [Correlation](https://www.materialinsights.org/commodities/dairy/correlation/index.md)
- [Extraction](https://www.materialinsights.org/commodities/dairy/extraction/index.md)
- [Production](https://www.materialinsights.org/commodities/dairy/production/index.md)
- [Stocks](https://www.materialinsights.org/commodities/dairy/stocks/index.md)
- [Trading](https://www.materialinsights.org/commodities/dairy/trading/index.md)
- [Movement](https://www.materialinsights.org/commodities/dairy/movement/index.md)
- [Criticality](https://www.materialinsights.org/commodities/dairy/criticality/index.md)
- [Characteristics](https://www.materialinsights.org/commodities/dairy/characteristics/index.md)
- [Emissions](https://www.materialinsights.org/commodities/dairy/emissions/index.md)
- [Relationships](https://www.materialinsights.org/commodities/dairy/links/index.md)