Although it’s a very quiet time for dairy markets with most European traders on holidays, there’s still a significant amount of uncertainty in the air right now. While dairy commodity prices have recovered strongly from the lows they hit in April, dairy traders are reporting that it’s very difficult to forecast what the second half of this year will hold for prices due to the enormous uncertainty created by COVID-19.
Although it’s a very quiet time for dairy markets with most European traders on holidays, there’s still a significant amount of uncertainty in the air right now.
While dairy commodity prices have recovered strongly from the lows they hit in April, dairy traders are reporting that it’s very difficult to forecast what the second half of this year will hold for prices due to the enormous uncertainty created by COVID-19.
Most countries have eased lockdown restrictions in recent months, but case numbers of COVID-19 are on the rise again. What this growth in case number means and how countries will react in the coming weeks and months remains very hard to say for certain.
This uncertainty is best reflected in the recent volatility we’ve seen in the GDT index in New Zealand. In early July, the GDT soared by more than 8% after a massive spike in the price of whole milk powder (WMP).
Butter prices fell 3%, while cheddar cheese prices were back more than 5%
And here we are just a month later and dairy prices have this week slumped over 5% at the latest GDT auction. This week’s fall in the GDT was driven by a near 8% decline in WMP prices to $3,000/t (€2,535/t) and a 5% fall in the price of skimmed milk powder (SMP) to $2,585/t (€2,180/t). Butter prices fell 3%, while cheddar cheese prices were back more than 5%.
The recent weakening of the US dollar is also not helping matters. In Europe, dairy prices are very steady across the board, but could we start to see increased price volatility when traders return from holidays? Time will tell.
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