At this week’s GDT auction, average dairy commodity prices dropped 3.2% to send the benchmark index to its lowest point since early November. Dairy prices at the GDT have now declined a cumulative 5.2% since the start of 2017 as buyer demand has remained tepid.
At this week’s GDT auction, average dairy commodity prices dropped 3.2% to send the benchmark index to its lowest point since early November. Dairy prices at the GDT have now declined a cumulative 5.2% since the start of 2017 as buyer demand has remained tepid.
This week’s decline was primarily driven by another poor showing for milk powder prices. The price of whole milk powder (WMP), which is the most important dairy commodity traded, accounting for over 50% of product sold, declined almost 4% to $3,190/t.
Having rallied strongly from July through to November, the price of WMP achieved at GDT auctions has now dropped a cumulative 11% since early December. This week’s decline was a result of increased volumes available for sale, with Fonterra offering almost 14,000t of WMP to the market, which is 5% more product than the previous auction.
On the skim (SMP) side, prices at this week’s auction were also down 4% to average $2,575/t, despite unchanged sales volumes. The major obstacle to price improvement for SMP is the 350,000t of product the market knows is still sitting in intervention across Europe. This overhang will continue to set a price ceiling.
Of the other products traded on the GDT, there were declines in price for cheddar (-5%), buttermilk powder (-13%), anhydrous milk fat (-1%) and casein (-6%). The only product to record a price increase was lactose (+7%). Butter prices were flat at $4,600/t.
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