Global AMF and SMP Prices have come below Local ghee and SMP prices
The global dairy marketplace registered a noticeable softening in Event 392 of the GDT auction, held on 18 November 2025. According to secondary data sources, the overall GDT Price Index is estimated to have fallen ~3.0% relative to Event 391, with a weighted average price around US$3,678/tonne for the full mix of traded products. Key product-group declines included: Whole Milk Powder (WMP) down ~1.9% to US$3,452/tonne; Skim Milk Powder (SMP) marginally down ~0.6% to US$2,542/tonne; Butter fell ~7.6% to US$5,886/tonne; and Anhydrous Milk Fat (AMF) declined ~5.0% to US$6,543/tonne. The sold volume for the event reached around 38,612 tonnes, signalling that supply was substantial despite weaker price momentum.
The decline reflects the global oversupply environment, particularly in market-sensitive fat lines, and muted buyer demand amid macroeconomic headwinds. In this environment, butter and AMF show sharper sensitivity to cyclical demand weakness, while SMP remains relatively more supported albeit at a low base.
Implications for India’s Dairy Sector
For India’s dairy industry—characterised by a rising share of global production and a vast smallholder base—the Event 392 outcomes carry several key take-aways:
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Commodity pressure intensifies: The drop in global reference prices gives Indian processors lower import parity benchmarks for powders, butter and AMF. This increases the risk of domestic price erosion, especially for commodity exports or inventory clearance.
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Feed cost advantage may soften: While India benefits from relatively lower feed cost inflation, weaker global commodity lines reduce export arbitrage opportunities, meaning processors must rely more on domestic circulation and value-addition rather than simply exporting powders at premium.
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Buffer for farm-gate receives stress: With global fat product prices dropping, the domestic ghee/butter price corridor is likely to face downward pressure—especially as India moves into the milk flush season. Unless coordination via cooperatives and contract procurement holds up, smallholder farmers may see slower procurement-price increases or even corrections.
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Export window shrinks: Indian powder exporters face tougher competition from global surplus volumes and cheaper imports, reducing margins and limiting processing incentives. This points to a need for diversification into value-added lines or leveraging niche premium segments (e.g., organic, fortified, traceable dairy).
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Strategic opportunity for value-add: Rather than competing purely on commodity, Indian industry is better positioned to emphasise premiumisation, sustainability, farm-to-fork traceability and domestic market growth to offset global headwinds.
Near-Term Outlook (Next 3-6 Months)
Given the global softness signalled by Event 392 and India’s seasonal milk‐production surge ahead, the next few months are likely to see:
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A modest correction in Indian ghee and butter prices as supply rises and export arbitrage narrows.
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SMP (buffalo and cow) prices may hold better relative to fats, but upside will be limited; margin compression risks increase if feed cost rises or procurement mismatches occur.
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Processors should caution against overexpansion of commodity powder lines and instead accelerate value-add, branded dairy, and export-ready specialty segments (e.g., fortified powders, goat milk, A2-milk).
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Policymakers may need to monitor margin pressure on smallholder farmers and consider targeted support (procurement stabilisation, feed subsidies, export facilitation).
Global auction results from GDT Event 392 highlight that the global dairy cycle remains under stress, especially for fat‐rich commodities. For India, this is both a warning and a call to act — to guard smallholder income, to deepen value‐add capabilities, and to pivot away from pure commodity exposure. The window remains open to shift from price → value, and from volume → diversification, if the Indian dairy value chain responds with agility.
Source : Dairynews7x7 Nov 18th 2025 commentary by Kuldeep Sharma