Dairy markets were mixed this week, with a positive Global Dairy Trade (GDT) auction marred by falls on the European spot market.

Starting with the GDT, prices and the amount traded were both up this week. The overall index increased in price by 2.7%, while the quantity traded was over 37,000t – the largest in quite some time.

Delving deeper, whole milk powder (WMP) increased by 5.3%, while skim milk powder (SMP) fell by 1.6%.

More than three quarters of all product sold on the platform is WMP and SMP, so these have the greatest effect on the overall index value.

The rise for WMP is undoubtedly positive, but it still needs to be viewed in the context that it fell in value by almost 11% at the last auction.

Back in Europe, prices on the spot market for all key commodities fell this week.

Some of this was a delayed response to the previous GDT auction drops, as European traders were on holidays for much of August.

WMP fell this week by €150/t to €3,115/t, which is still at a significant premium to the price at the GDT.

Converted to US dollars, the European price is $3,343/t, while the GDT price is just over $2,700/t.

What happens next is anyone’s guess. Certainly, the increase in demand at the GDT is a good sign, but one swallow doesn’t make a summer and prices are still much lower than they were six weeks ago.

Because the problem is driven by a lack of demand for dairy, it will require a sharper than normal decrease in supply to bring some equilibrium.