Futures prices for whole milk powder (WMP) fell back slightly over the last fortnight, but generally the market remains steady overall with no significant swings up or down in prices. June, July and August contracts for WMP traded on the NZX derivatives market are back 3% in price since the last GDT auction held two weeks ago, which surprised many after returning a negative result.
Although milk powder prices did increase at the last GDT, declines in the price of butter (-5.5%), butter milk powder (-5.5%) and skimmed milk powder (-3.6%) all combined to drag the dairy index lower.
Ahead of the next GDT auction scheduled for Tuesday of this week, the slight fall back in WMP futures prices may indicate another slight decline in the benchmark dairy index but, overall, the market is extremely uncertain right now.
The Irish Farmers Journal understands that activity from Chinese buyers in the global market has significantly dried up in recent weeks. After resurgent import demand from China for dairy in the first three months of the year, Chinese buyers accounted for as little as 10% to 20% of product sold at the last GDT auction.
Demand in particular for SMP and WMP, the two most important products traded on the auction platform, was very low, with China buying less than 1,000t of both products on the day. This apparent downturn in Chinese demand will be a serious cause for concern for the global dairy industry as China is the world’s largest importer.
Tuesday’s GDT will be keenly watched to see the level of Chinese activity.
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