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Buyer demand for dairy commodities has eased in the past week, as the holiday period in Europe gets underway. European spot prices for butter have fallen back slightly in the last week, dipping below the €6,000/t mark, while skimmed milk powder (SMP) prices are back at intervention levels.
Buyer sentiment for SMP has been quite subdued over the last fortnight following the EU Commission’s decision to sell 100t of SMP out of intervention for a price of €1,850/t. The knock-on from this saw SMP prices take a sharp fall (-5%) to €1,835/t ($2,090/t) at last week’s GDT auction in New Zealand.
In contrast, market sentiment for whole milk powder (WMP) has improved since last week’s GDT auction as powder prices defied expectations. Almost 15,000t of WMP was sold at last week’s auction, with average selling prices rallying 3% to above $3,100/t. There wasgood demand from buyers in China and other Asian markets.
The positive result at the latest GDT auction has seen dairy powder futures markets rally in recent days. Contracts for August-, September- and October-delivered WMP jumped close to 4% in price immediately after last week’s GDT (see graph above).
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