Nonfat Dry Milk Prices Explained

Nonfat dry milk prices are swelling due to the rising demand from the food and beverage industries. The commodity’s longer shelf life and storage make it suitable for numerous applications that require longer processing. Also, its versatility in the baking and food and beverage industry fuels its marketability.

Why are nonfat dry milk prices fluctuating?

1. Dairy Market

Nonfat dry milk (NFDM) is a dehydrated and defatted cow’s milk. Therefore, its price follows the broader dairy market.

The global milk production in the last quarter of the previous year saw a slow demand, putting downward pressure on raw milk prices. However, this was offset by increased demand for butter and cheese which compete with NFDM for the same milk supply. Thus, nonfat dry milk prices remained relatively stable in many regions.

2. Exports

It’s a global commodity with major exporters like New Zealand and the U.S. supplying markets worldwide. Thus, fluctuations in currency exchange rates and trade policies significantly impact nonfat dry milk prices depending on the region.

For instance, the strengthening U.S. dollar made American nonfat dry milk less competitive in international markets, contributing to slightly lower domestic prices.

3. Supply and Demand

While global milk production seems steady, regional imbalances cause price volatility. Droughts, floods, or unforeseen events affecting cattle or processing facilities in specific producing countries disrupt supply, pushing nonfat dry milk prices up due to temporary shortages.

On the other hand, unexpected increases in production from certain regions lead to temporary surpluses and price dips.

4. Seasonal Need

Seasonal variations in demand influence nonfat dry milk prices. For instance, the baking season (September-December) often sees a surge for this commodity from bakeries and confectioners, spiking its prices. Conversely, spring and summer typically see lower demand, leading to potential price declines.

However, innovative trends using this commodity will translate seasonal demand into a permanent one as Lactalis Ingredients (a French company) launched organic whole milk powder. The powder is suited for various food applications and if proven effective, this will boost nonfat dry milk prices.

Which variables impact the price of nonfat dry milk?

• Dairy Market
• Exports
• Supply and Demand 
• Seasonal Need
• Other Dairy Alternatives

Where does nonfat dry milk come from?

It is a versatile and shelf-stable dairy product and its processing requires several steps to produce a fine milk powder. Here is the detailed method:

1. Skimming the Fat – The first step includes separating the cream from the milk. This is done using a centrifuge that spins the milk at high speeds, causing the lighter cream to rise and skim off. Then, the remaining skim milk ( without fat content ) forms the base for nonfat dry milk production.

2. Concentration and Standardization – Next, the skim milk is concentrated through evaporation to reduce its water content and increase the concentration of milk solids. This enhances the efficiency of the drying process and ensures a standardized final product.

3. Drying Methods – Nonfat dry milk production has 2 drying methods:

Spray Drying – The most common method. It includes breaking the skimmed milk into a fine mist and sprayed into a hot air chamber. The water evaporates rapidly, leaving dry milk particles that are collected and cooled. This technique produces a fine powder.

Roller Drying – Skimmed milk is spread as a thin film into a heated rotating drum. The water evaporates as the film passes over the drum, resulting in a dried sheet that is scraped off and processed into powder. This step typically yields a coarser powder but with a longer shelf life.

4. Finishing Touches – Then, the dried milk particles are sieved to remove any lumps and ensure a consistent size. For specific purposes, the powder is processed by adding lecithin to improve its solubility in water.

5. Quality Control and Packaging – The final product undergoes strict quality control checks to make sure it meets safety and hygiene standards. Once approved, it is packaged in airtight containers or bags for storage and distribution.

What are the uses of nonfat dry milk?

This commodity is not only a kitchen staple as its application extends into many industries. Here are the top uses of nonfat dry milk:

1. Baking – It adds richness and moisture to baked goods, boosting texture and flavor. Also, the protein in nonfat dry milk promotes browning, that golden crust we all love to munch.

2. Creamy Delights – Soups, sauces, and stews get a creamy taste because of this commodity as it thickens liquids without adding unwanted fat and enhances the savory flavor profile.

3. Nutritional Powerhouse – It is a good source of protein, calcium, and vitamins. Thus, it’s a valuable addition to smoothies, infant formula, and nutritional supplements.

4. Global Goodies – In India, it’s a key ingredient in paneer ( a delicious cheese ), and in China, it thickens savory congee porridge.

5. Pet Treats – It’s used in pet food to boost protein content. Additionally, its binding properties make it useful in adhesives and even in the production of biodegradable plastics.

6. Sustainability Spotlight – Nonfat dry milk is a key player in sustainable food practices as its long shelf life reduces transportation needs. Furthermore, it’s readily available and doesn’t require refrigeration.

What is the future price of nonfat dry milk?

Nonfat dry milk prices show volatility in the market as their prices vary globally due to regional demand, production costs, and trading dynamics. However, the infant formula and baking applications still hold as its major price drivers. Nonfat dry milk contributes valuable properties along with enhancing texture, extending shelf lifestyles, and offering a supply of protein and calcium without bringing fat.

Also, the rising demand for nutraceuticals and sports nutrition contributes to its marketability. Moreover, increased inquiries for conventional milk from India, Nigeria, and China provide diverse market opportunities. On the supply side, the declining number of cows in the U.S. and Brazil will slow down manufacturing.

Overall, dairy market analysts predicted a bullish nonfat dry milk price in 2030 at $1.25 – $1.50 per pound due to the reduced supply and steady demand from various industries.