April, May and June contracts for whole milk powder (WMP) have declined 5% in price over the last week, suggesting that Tuesday’s global dairy trade (GDT) index could fall again.

Wet conditions had looked set to hit New Zealand milk supply with a 7% decline for the season. However, with what was being labelled as the “pasture disaster” now fully unravelled, it is estimated that supply for the season will only be down 1% to 2%.

As can be seen from the red line in the graph below, the futures market price for WMP is currently at its lowest point in four months. While never set in stone, the futures market for WMP can act as a decent bellweather for buyer sentiment in global dairy markets.

At the last GDT, average prices paid for milk products fell by 3.2%, signifying the second sharpest drop of 2017. This price drop came on the back of a 5% drop in WMP futures prices. With a similar scenario unfolding this week, tomorrow’s GDT could be set for another slip.

Butter

Irish dairy has recently seen the resurgence of butter as a bright spot for farmers amid poor dairy prices. The industry should hold one eye on the performance of butter in Tuesday’s GDT, after it was one of only two products to record a price rise (0.2%) in the last trade.

Dairy Trends: Increased WMP supply drags GDT performance

Ireland becomes the EU’s largest butter exporter

Dairy markets: another GDT fall expected

New Zealand milk output is back on track after a period of wet weather on both islands. Matthew Halpin analyses the dairy markets ahead of this week's GDT.