Anhydrous milk fat prices declined at the latest Global Dairy Trade auction, reflecting weaker demand or increased supply for the product. The overall dairy price index rose, but anhydrous milk fat was among the products that fell in value.
Dairy milk sales in the US are recovering after years of decline, driven in part by lower milk prices that drew cost-conscious consumers back from plant-based alternatives. Growing consumer focus on protein content and ingredient transparency is further supporting demand for dairy over plant-based options.
Asia
Asian anhydrous milk fat procurement remained closely linked to Oceania supply and Global Dairy Trade sentiment during H1 2026. New Zealand milk production increased during the 2025/26 season, with Fonterra reporting season-to-date collections 4% above the previous season by May. This improved availability of milk solids for butterfat products, although periodic GDT recoveries provided support to export-oriented pricing. Chinese and wider Asian food manufacturers maintained buying interest, but procurement remained measured amid volatile international dairy quotations.
Europe
European AMF markets faced increasing supply availability as EU milk production rose 4.6% year-on-year during January-February, while butter production increased 10%. This strengthened the availability of milkfat for butter and AMF processing and contributed to downward pressure on dairy-fat markets during parts of the first half. Export demand and periodic movements in global dairy auctions nevertheless prevented a sustained one-directional decline.
North America
North American AMF fundamentals were influenced by expanding milk production and stronger milk-fat output. US milk production increased year-on-year during the opening months of 2026, while milk-fat production also recorded faster growth than overall milk output. USDA subsequently raised its 2026 milk-production forecast and expected higher dairy exports, allowing additional butterfat availability to flow into international markets.
Analyst Insight
According to Procurement Resource, anhydrous milk fat costs are expected to remain volatile in the coming months, with strong milkfat availability limiting sustained upside while Asian demand and potential weather-related supply risks could provide intermittent support.
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Asia
In Asia, prices for AMF were firm throughout 2025. In the first half, prices slightly increased due to the increased demand from dairy processors and food manufacturers. In Australia, moderate support for prices of AMF was noted due to favorable seasonal milk production and export opportunities. In the second half of the year, prices for AMF increased due to the need for holiday demand. Favorable weather conditions resulted in farm margins, keeping the prices firm.
Europe
European AMF prices had mixed movements during 2025. In the first half, prices were relatively stable, with an increase in milk production, albeit at a gradual pace, and processors paying relatively stable prices to maintain their supplies. In the second half, however, prices were affected by an increase in global milk supplies, along with declining commodity values, especially for butter and cheese. Competition from imported products, along with declining wholesale prices for dairy commodities, impacted AMF prices. Organic AMF prices performed slightly better than conventional ones due to their relatively high demand and input costs. Overall, prices declined during the second half.
North America
AMF price levels in North America exhibited contrasting trends in the US and Canada. In the US, production has been steadily increasing over the course of the year, contributing to global supply and thereby exerting a downward pressure on AMF prices in the latter half of 2025. In Canada, AMF price levels have been sustained through changes to farmgate pricing levels, reflecting increases in production costs and the need to sustain farmer margins.
Anhydrous Milk Fat is composed of pure milk fat. A product must contain at least 99.8 % milk fat and be made from fresh cream or butter in order to be called AMF, that is, Anhydrous Milk Fat. A fatty product, AMF is obtained exclusively from milk and/or milk products by means of processes that allow total removal of water as well as non-fat solids. No additive should be added in its production, that is, for neutralisation of free fatty acids and other processes.
Recombined milk or dairy products and fractionated milkfats, Blends and spreads, Confectionery and baked goods, Culinary preparations, Processed cheese and cheese milk extension, Ready-to-drink beverages, Ice creams and chocolates
Fonterra Co-operative Group, Dairy Farmers of America Inc, Hilmar Cheese Company, Inc, Lactalis Group, FrieslandCampina, Westland Milk Products, Synlait Ltd.
CurrencyUS$ (Data can also be provided in local currency)
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In order to produce Anhydrous Milk Fat, melted butter is passed through a centrifuge to get butter oil. This step is followed by the vacuum drying process to finally obtain Anhydrous Milk Fat.
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