Albeit only a slight improvement, this week’s GDT result brought a welcome reprieve to dairy markets, with the benchmark index finally recording a lift following four consecutive drops since the start of 2016.

The index jumped by 1.4% at Tuesday’s auction in New Zealand, with an average product selling price of $2,253/t. More importantly, the average price of whole milk powder (WMP) jumped by 5.5%, edging towards the $2,000/t price mark. WMP is the key commodity traded on the GDT, accounting for more than half of sales.

There were also improvements in the average price of skimmed milk powder (SMP)(+1.3%), casein (+14.9%) and lactose (+7.9%). The average price of butter and cheddar fell marginally, by 0.5% and 0.7% respectively.

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The volume of product sold at Tuesday’s GDT remained low, with just under 21,900t sold via the auction platform, which is in line with this time 12 months ago, but significantly back from the 42,000t sold this time two years ago.

Chinese demand appears to be on the increase, with dairy imports to China for January 2016 surging by more than 50% to almost 290,000t compared with the same month last year. Dairy powders including WMP, SMP, whey and infant formula continue to account for the bulk of imports. WMP alone accounts for more than 40% of imported volumes.

While the surge in imported volumes is notable, it must be remembered that January is a big month for Chinese imports, as traders can take advantage of lower import tariff rates set out in the New Zealand-China trade agreement. Additionally, the lower price point of all dairy commodities is certainly incentivising purchasing, with the average price per tonne of WMP back 17%, SMP back 32% and whey prices down 44%.