The FAO Dairy Price Index averaged 131.3 points in February, down 3.6 points (2.7%) from January and standing 10.2 points (7.2%) below the corresponding month last year. In February, the decline in the index was driven by lower prices across all dairy products, with the steepest falls in butter and skim milk powder (SMP).
The continued weakness in global import demand, especially for near-term deliveries underpinned the price declines, despite a noticeable increase in purchases in recent weeks by North Asia.
In addition, increased exportable supplies, including inventories of butter, cheese and SMP, in Western Europe, where seasonal milk deliveries in recent months have tracked above their corresponding monthly averages, also weighed on global export prices.
China is out of the buying market yet while other buyers are waiting in wings and not in a hurry, except for ONIL which has completed a transaction recently.
On the other side, situation is becoming tighter in India, with lower milk production over last year, increasing milk prices and looming drought situation as predicted during this summer. While we are hopeful of rebound in milk production during this season (Cow milk showing peak in Jun-Jul and Buffalo milk increasing from Sep-Oct onwards), there is still some pain left for the country for next few months.
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