After nine losses in a row from August the GDT turned around to produce six increases this year.
The auction lifts — and full contracts — encouraged Fonterra to raise its midpoint forecast by 50 cents a kilogram of milk solids to $9.50/kg in late February.
Global dairy commodity prices have rallied this quarter year particularly for Australasian products, but the world’s milk supply is continuing to grow and outpace demand.
A Rabobank report acknowledging tentative signs of recovery in global prices in recent months also notes global markets are well supplied.
Strong milk production growth has emerged across all of the world’s major dairy-exporting regions, except Australia.
Reasonably low livestock feed prices have encouraged more production and kept milk supply levels elevated worldwide.
Senior agricultural analyst Emma Higgins said the conflict with Iran and ongoing tensions in Ukraine and other regions could quickly disrupt global market balances.
"As the Middle East is an important market for milk powders, fat-filled powders and evaporated milk, the dairy market will follow the evolving situation in Iran and possible trade disruptions closely," she said.
She said the world appeared to be awash with milk in the fourth quarter of last year year resulting in four consecutive sharp decreases among nine auction losses.
"Since then we have seen [six] very solid GDT results and at a headline level we haven’t seen the supply scenario change."
The United States continued to increase output and European milk flows remained strong to December while NZ was also pumping out more milk.
Ms Higgins said the abundant milk supply picture remained true, but the availability of export products particularly for powders and milk fat was lower.
Normally at this stage of the season milk volumes auctioned at GDT tapered off in line with slower milk production, but they had tightened significantly, particularly for powder products.
She said it was always challenging to forecast the final payout several months in advance in a normal season and an uncertain global market had made this even harder to predict.
"Overlay this current global macro environment and the challenge just completely levels up another notch or two."
She was telling clients to prepare for ongoing volatility after rising oil prices and "whiplashing" markets from the Iranian crisis.
Climbing energy prices tended to worm their way into all facets of everyday life, including dairying, manufacturing and freight costs.
"This is a global problem and we know that the Strait of Hormuz is a critical checkpoint and incredibly important for crude oil flows as well as other things like jet fuel and critical fertilisers and chemical products so there will be ripple effects being felt certainly at the farming level in due course depending on the extent of the escalation of the war."
Global dairy prices declined for fats, whole milk powder, skimmed milk power, cheese and whey in last year’s final quarter of 2025.
Dairy protein markets including skim milk powder, cheese and whey were more resilient, recording smaller price declines.
The report predicted milk supplies were likely to tighten from the main global dairy exporters — European Union, US, NZ, Australia, Brazil, Argentina and Uruguay — in the final half of this year and into next year.
They are forecasted to end this year only 0.2% above last year, compared with an annual increase of 2.% in 2025 with the outlook for softening supply growth in South America, Australia and China.
"Ordinarily that would be broadly supportive for commodity prices, but there is a lot of water to go under the bridge or milk to flow through the vat between now and then."
She said GDT results showed the tighter availability of export products, and also buyers showing forward-purchasing behaviour by seeking shelf-stable products such as powders, during a period of global uncertainty.
Farmer confidence was high, with most of them making good-to-excellent money this season," she said.
Rabobank continued to expect milk collections would lift by more than 2% across the 2025/26 season, with further momentum likely into 2026/27, spring weather permitting.
