The outbreak of coronavirus continues to negatively affect sentiment in global markets, including dairy.

On Tuesday this week, the benchmark GDT dairy index recorded its third negative result on the trot, with average dairy prices falling more than 1%.

This week’s GDT auction was led lower by a 0.5% decline in the price of whole milk powder (WMP) to $2,950/t (€2,655/t) and a more than 3% decline in the average price of skimmed milk powder (SMP) to $2,745/t (€2,470/t).

The current weakness in the price of New Zealand WMP and SMP is no surprise given the country’s reliance on China as an export market for milk powder.

Speaking to the Irish Farmers Journal this week, Paul O’Brien of Chemlinked, a regulatory consultancy and technical services firm in China, said coronavirus has had devastating and far-reaching negative consequences for China’s food sector.

China’s containment strategy is bringing a rapid resolution to the outbreak, with 27 of the 31 major outbreak hubs reporting no new cases

“Apart from some highly digitalised segments such as e-commerce and food delivery services, all links in the supply chain and value chain are suffering. Interestingly, functional foods, nutrient supplements, convenience foods (noodles, snacks, etc) and certain segments of dairy have seen a spike in demand,” said O’Brien.

“China’s containment strategy is bringing a rapid resolution to the outbreak, with 27 of the 31 major outbreak hubs reporting no new cases. However, its impact on manufacturing, logistics, catering and bricks-and-mortar retail has been devastating and is translating to rapid inflation, with food prices rising by an average of 15%,” he added.