Global dairy: powders firm while the headline index treads water

FAO and GDT measure different markets and periods. Read the product mix before drawing a conclusion for South African milk.

Key points

FAO’s dairy index averaged 119.1 points in September 2026. [1]
GDT event 414 recorded whole milk powder at US$3,760 per tonne. [2]
Commodity quotations are not South African farm-gate milk payments.

Key figures

FAO dairy index: 119.1 points — September 2026; 2014–2016=100; down 0.1% month on month and 19.1% year on year [1]
Whole milk powder: US$3,760/tonne — GDT event 414, 20 October 2026, weighted average; +4.4% from previous auction [2]
Skim milk powder: US$3,975/tonne — Same event, weighted average; +3.4% from previous auction [2]

A steady index can hide a divided market

FAO’s Dairy Price Index averaged 119.1 points in September 2026, down 0.1% from August and 19.1% below a year earlier. The index is expressed in points, with 2014–2016 as the reference period, not dollars per tonne. It summarises international dairy price movements and does not measure the price a South African farmer receives for unprocessed milk. [1]

The near-flat monthly reading concealed contrasting products. FAO said falling cheese quotations were almost offset by rising milk-powder prices, while butter changed little overall. Skim milk powder quotations were 33.1% higher than a year earlier despite the decline in the aggregate dairy index. A statement that all global dairy prices are falling would therefore misrepresent this release. [1]

FAO linked powder strength to sustained import demand, especially from Asia, and limited availability for prompt delivery. For cheese, it pointed to weaker buying interest in Europe, competition from abundant US export supplies and increasing seasonal availability in Oceania. Butter’s broadly stable reading reflected offsetting developments across origins rather than uniform conditions everywhere. [1]

What the October auction adds

The European Commission’s results sheet for GDT event 414, held on 20 October, reports weighted-average whole milk powder at US$3,760 per tonne, up 4.4% from the previous auction. Skim milk powder averaged US$3,975 per tonne, up 3.4%. These are product auction observations covering the event’s contract mix, not a general price for all dairy exports. [2]

The same results show butter averaging US$4,721 per tonne, down 0.4%, and anhydrous milk fat at US$5,488 per tonne, down 3.4%. The contrast reinforces the need to distinguish powders from milkfat products. This edition does not report an overall GDT index movement because that exact aggregate result was not verified in the retained evidence. [2]

FAO’s monthly index and an individual GDT event are not interchangeable. Their timing, product coverage and weighting differ. As analysis, a stronger powder auction after a broadly flat monthly index need not be a contradiction; it can reflect newer information or a different mix of transactions. Nor does one auction establish a durable market turning point.

Supply, trade and the South African connection

European Commission data show EU cows’ milk collections rising 3.0% in January–August 2026 compared with the same months of 2025. Product output moved unevenly: cheese increased 3.6%, skimmed-milk powder 9.0% and total butter 7.7%, while whole milk powder declined 4.4%. More raw milk therefore does not imply the same increase in every tradable dairy product. [3]

For South Africa, the analytical connection is through competition, export opportunities and processors’ product returns. Converting a US-dollar powder quotation into rand is only an initial calculation. Freight, insurance, import charges where applicable, processing costs, yields and product specifications intervene before it can become a useful comparison with a domestic product.

It would be particularly misleading to divide a powder price by an assumed conversion factor and present the answer as a current national farm-gate milk price. A verified current payment in rand per litre was unavailable. The appropriate global conclusion is narrower: the observed market favoured powders more than some fat products, while regional supply and buying patterns remained important. That is a market signal to monitor, not a guaranteed change to a South African milk cheque. [1] [2]

Sources

[1] FAO Food Price Index — September 2026 (2026-10-02)
[2] European Commission: GDT auction results — GDT event 414, 20 October 2026 (2026-10-20 (event date; publication date unavailable))
[3] European Commission: milk production development — January–August 2026 versus January–August 2025 (Exact publication date unavailable)

This article first appeared in Economic Trends Issue 1, MaxMedia's digital magazine on dairy economics.

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