At the last four GDT events we have seen consecutive positive results from the benchmark dairy index that has helped to lift dairy market sentiment considerably. Since early August, the GDT index has risen a cumulative 28.7% driven by strong growth in the average price of whole and skimmed milk powders (WMP & SMP), the two most important commodities traded on the auction platform accounting for almost three quarters of product sold at each event.

However, looking at the New Zealand futures market, it would appear WMP prices have begun to level off or even enter a period of price decline. In the last fortnight, November, December and January futures contracts for WMP have declined more than 8% in price, suggesting this week’s GDT event may be a more subdued affair.

While never set in stone, the WMP futures market can act as a decent gauge for the performance of the bi-weekly GDT auction. At the last GDT auction, the average price of WMP actually declined marginally by 0.2% to $2,780/t meaning the signs of a GDT slowdown this week are beginning to stack up.

Read more

Dairy trends: Whole milk powder futures prices dip hinting at GDT slowdown

Dairy markets much improved but threats remain