The FAO Dairy Price Index averaged 249.8 points in May, a fall of 9 points (3.5 percent) from the exceptionally high level recorded in April. Amongst the products that make up the index, skim milk powder experienced the sharpest fall (-12.2 percent), followed by butter (-6.8 percent) and whole milk powder (-6.2 percent), while the average price of cheddar cheese rose slightly. Supplies of milk products for trade are still constrained by weather related factors affecting milk production in most of the major exporting countries.
Despite the decrease in the FAO Dairy Price Index during May it remains 42% higher than it was a year ago. Strong export volumes out of New Zealand 12 months ago placed downwards pressure on global market prices for dairy commodities. The over supply to the market was reflected in the index which langished around 170 points from May 2012 through to August 2012.