Following the near 7% rise at the last GDT auction, all eyes will be on New Zealand on Tuesday this week for the latest GDT auction to see if the positive momentum can be continued. The last result from the benchmark GDT was the first real signal to dairy markets that a recovery in milk powder prices was under way after whole milk powder (WMP) prices shot up 10% to an average selling price of $2,265/t.
While global prices for butter and cheese have been rising since early May, milk powder prices have remained stubbornly weak up to now and weighed heavily on markets. However, the upshot in WMP prices has lifted market sentiment with WMP futures prices soaring over the last two weeks as markets anticipate the price recovery to continue at this week’s GDT.
In the last fortnight, milk powder futures prices have risen strongly with September, October and November contracts for WMP climbing almost 15% in value. While WMP prices appear to have turned a corner and finally have some much needed upward momentum, the situation for skimmed milk powder (SMP) is likely to remain more challenged for some time yet.
Global prices for SMP remain very weak overall and close to intervention levels. The market is still overhung with massive global stocks of SMP, which is weighing down any significant price rise potential.
In Europe, close to 250,000t of SMP is currently sitting in intervention storage, while the US market is also oversupplied in skimmed powders. The general improvement in global dairy markets has prompted the first increase in milk prices in Ireland after months of cuts in farmgate prices.
Last week, Lakeland, Glanbia and Arrabawn all increased their milk price for July by 1c/litre, while Carbery held its milk price. The boards of Dairygold and Aurivo will set milk prices for July early this week.