Futures prices for whole milk powder (WMP) have declined sharply in the last week, as markets react to the more subdued result at last week’s GDT event. October, November and December futures contracts for WMP declined almost 8% in the last week, which may suggest that the GDT has found a new level after recording strong growth since early August.

At last week’s auction, the GDT recorded its fourth consecutive increase, with the benchmark dairy index lifting another 1.7%. However, the real story of the auction was the flat performance of WMP, with prices actually declining a marginal 0.2% to $2,780/t. WMP is the most important commodity on the GDT accounting for more than half of product sold.

Last week’s flat performance at the GDT, coupled with the 8% decline in futures prices in the last week, suggests WMP prices have plateaued after weeks of bullish price growth. The recent upturn in WMP prices had powered the GDT results since early August and this stalled momentum means we could see the GDT regress somewhat at future events.

The only upside has been the continued improvement in skimmed milk powder (SMP) prices, which rose a further 3% at last week’s GDT event. SMP has gained almost $300/t in the last few weeks and the price premium is narrowing between WMP and SMP prices once again, after the difference had reached almost $700/t at one point this month.