After two positive auctions in a row, this week’s GDT resumed the downward trend with a 3.5% drop to an average price of $3,911t.

This leaves the index at 1166, the second lowest point since January 2021.

Butter took the biggest hit, down 7% to an average of $4,983t. Cheddar was down 3.8% to $4,966 and the whole milk index was down 4% to an average of $3,573t.

The negative tone is added to by the high volume traded (in excess of 30,000t) and there is growing concern about the impact of inflation on the demand side, which is a global issue in the final quarter of 2022.

China is also buying less dairy products, which has a huge impact on global demand. The fact that supplies remain constrained in many parts of the dairy producing world is controlling the supply side in what is a delicately balanced market.

The return to the downward trend that had been in place since March before two positive events in September is a knock to dairy industry confidence. Already the next auction is being eagerly anticipated to see if this is a temporary setback.

In the UK, AHDB reports that UK milk deliveries for the first six months of 2022 were down 1.9% or 145m litres. This led to a reduction of butter production (-3%) and powders but cheese production was up again, increasing by 5,000t on last year’s record high of 260,000t for the first half of the year. The UK has also imported a total of 735,600t of dairy products in the period January to July this year, an increase of 11% year on year.