This week’s Global Dairy Trade (GDT) auction result was up 4% on average compared with the steady auction two weeks ago.
The move comes as a shot in the arm to milk prices as boards meet to set August milk prices.
What’s interesting about this is the timing. New Zealand milk begins to flow about now in larger volumes, as cows calve on the North Island and South Island.
The steady result two weeks ago was positive and now the +4% result is a reinforcement that the market is steady and will boost dairy commodity prices.
The driver of this increase will be Chinese demand continuing and lower than expected milk volumes produced in Europe keeping a lid on supplies.
While the US milk supply is good, the proportion of overall dairy product exported, its location and spec plus rising feed-to-milk-price ratios mean these will soon put a lid on that additional supply.
In the GDT, whole milk powder was up 3.3% to $3,691 (€3,124) per tonne, which is the key ingredient to watch for at the auction.
Skim powder was up 7.3% and butter up 3.7% to $4,948/tonne (€4,188).
Irish milk suppliers will be hoping co-op prices can get closer to what Ornua can get from the market and now they will be expecting to see this GDT result underpin the market for the autumn.
It is a lot easier for the co-ops to lift the price in the autumn as the supply isn’t anywhere near where it is in May, June and July.
Traditionally, Ireland pays more for milk in autumn relative to the European average.