Ahead of this week’s GDT auction in New Zealand, market sentiment for milk powder has softened somewhat over the last fortnight. Futures prices for whole milk powder (WMP), which is the key dairy commodity traded at the GDT auction, have declined steadily in recent weeks with August, September and October contracts for WMP falling 4% in price.
Ahead of this week’s GDT auction in New Zealand, market sentiment for milk powder has softened somewhat over the last fortnight.
Futures prices for whole milk powder (WMP), which is the key dairy commodity traded at the GDT auction, have declined steadily in recent weeks with August, September and October contracts for WMP falling 4% in price.
The decline in futures prices over the last fortnight follows the last GDT auction where the average price of WMP fell more than 3% to just over $3,000/t.
As such, it could be likely we will see another decline in WMP prices at Tuesday’s GDT auction.
Closer to home, the EU Commission’s decision last week to sell 100t of skimmed milk powder (SMP) out of intervention for a price of €1,850/t has also affected market sentiment. Prior to this, the EU Commission resisted selling any food grade SMP product below €2,000/t.
This was seen as a clear signal to international dairy markets that the EU would not be offloading huge amounts of its 350,000t intervention stock of SMP for below market prices.
But this week’s sale price of €1,850/t appears to have caught dairy markets off-guard and price sentiment for powders is more subdued than previous weeks.
Dairy buyers will be closely watching Brussels to see if this is the new price level the EU Commission expects to sell its intervention stock at.
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