Global Dairy Trade crashes again

The Global Dairy Trade (GDT) fell 10.7% this week (Wednesday) – the ninth consecutive fall in the GDT since mid-March – to bring the average price of product traded to $2,082 with 31,691 metric tonnes (mt) of product traded. The volume of product traded for this time of the year is down over 5,000 mt compared to the average product traded for the last three years.

The fall confirms the pessimistic views expressed by some industry specialists.

In terms of products, the big fallers were cheddar down 13.9% (to $2,613/t) and whole milk powder (WMP) down 13.1% (to $1,848/t).

US supply was up 1.4% year-on-year in May, despite the California drought, posting a drop of 2.9% for the same period.

It looks like US supply is going to continue, as relatively low feed prices remain, with corn and soybean meal price forecasts unchanged for the 2015/16 marketing year.

Strong US export volumes in April and higher expectations for export demand mean US dairy exports have been reviewed upwards.

On the demand side, Chinese imports are still low relative to year-on-year.

Russian imports are down over 40%, impacted by trade embargoes.

In Asia, outside of China, Thailand imported higher volumes than last year, as did Malaysia and Singapore, while imports into Pakistan were also notably higher.

Rabobank suggests prices are expected to enter a recovery phase in late 2015/early 2016 as rising income and retail price relief should provide impetus for demand recovery.

Blimling suggests while pressure remains on WMP prices, New Zealand’s season is at an end, while European manufacturers shy away from WMP production. WMP production fell by 14% combined in Germany and Holland.