Dairy prices rise in March due to energy‑related pressures

GLOBAL – Global food commodity prices increased in March for the second consecutive month, driven largely by rising energy costs linked to escalating conflict in the Near East, according to the Food and Agriculture Organization of the United Nations (FAO).

The FAO Dairy Price Index has averaged 120.9 points, up 1.5 points (1.2%) in March, but remained 27.8 points (18.7%) below its level a year earlier.

This marked the first increase since July 2025, driven primarily by higher quotations for skim milk powder (SMP), butter, and whole milk powder (WMP), while lower international cheese prices limited the overall rise.

SMP and WMP prices extended the upward trend observed since January, supported by firm global import demand and a seasonal decline in milk supplies in Oceania as the production cycle moved past its peak. 

International butter prices also edged up, with stronger gains in Oceania reflecting tightening milk fat availability, while increases in the European Union remained moderate due to comfortable cream supplies amid improving seasonal milk flows.

By contrast, cheese prices declined further in the European Union, where increased milk availability, higher cheese output, and subdued export demand weighed on quotations, while prices in Oceania firmed, supported by tighter supply conditions and relatively strong demand.

In February, the FAO Dairy Price Index declined by 1.2 per cent, driven primarily by lower cheese prices. International quotations for skim and whole milk powders increased notably amid strengthening import demand from North Africa, the Near East and Southeast Asia, while world butter prices registered their first monthly rise since reaching an all-time high in June 2025.

The FAO Dairy Price Index fell by 5.0% from December, driven largely by lower prices for cheese and butter amid ample availability. Meanwhile, world skim milk powder prices firmed, supported by renewed import demand from the Near East, North Africa and parts of Asia.

World food commodity prices rose in March for the second month in a row, due largely to higher energy prices linked to the conflict escalation in the Near East, according to the latest benchmark measure released by the Food and Agriculture Organization of the United Nations (FAO).

“Price rises since the conflict began have been modest, driven mainly by higher oil prices and cushioned by ample global cereal supplies,” said FAO Chief Economist Máximo Torero.

“But if the conflict stretches beyond 40 days with high input costs with current low margins, farmers will have to choose: farm the same with fewer inputs, plant less, or switch to less intensive fertilizer crops. Those choices will hit future yields and shape our food supply and commodity prices for the rest of this year and all of the next.”

The FAO Food Price Index, which tracks monthly changes in the international prices of a basket of globally-traded food commodities, averaged 128.5 points in March, up 2.4 percent from February and 1.0 percent above its level a year ago.

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