Despite wet weather negatively affecting milk production in New Zealand so far this season, the GDT posted its biggest decline since early March at this week’s auction.

With close to 38,000t of dairy product sold, this week’s GDT auction saw average prices fall 2.4%, with weaker buyer sentiment right across the commodity complex.

Continued weakness in powder prices led the benchmark dairy index lower.

With Fonterra starting into its seasonal peak in production, almost 21,000t of whole milk powder (WMP) were offered for sale.

However, prices fell close to 3% to hover just over $3,000/t (€2,580/t).

On the skimmed powder (SMP) side, the market remains under significant downward pressure and prices fell 1.5% at this week’s auction to less than $1,900/t (€1,610/t).

It was interesting to see products in the fats complex also recording losses at this week’s GDT.

Butter prices declined 4% to less than $5,850/t (€4,955/t), while anhydrous milk fat prices were back more than 3%.

The price of buttermilk powder also tumbled more than 10%.

The weaker sentiment coming from New Zealand is also being felt in Europe, with quotes from the Dutch dairy board all in retreat this week.

Europe’s butter market remain way out of touch with the global market as supply remains thin, but prices are back almost 4% this week to €6,690/t.

SMP prices declined further this week to a new low of €1,610/t as the market tries to bottom out. But with massive stocks and traders reporting very poor demand, how low can this new price floor fall to?

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