The results from the third Global Dairy Trade (GDT) auction of the year proved to be a really positive one, with the index increasing by 3.7%, adding to the previous auction lift of 1.4%.

The main movers were once again powders, with whole milk powder (WMP) increasing by 4.1% while skim milk powder (SMP) increased by an impressive 4.7%.

There was a huge increase in the demand for lactose, with prices at the auction jumping by 17.7%, which is remarkable, albeit the volumes traded are small.

The overall amount of product offered at the auction at almost 24,000t is back about 14% on the last auction, so we are likely heading into a period of lower volumes being traded as New Zealand comes off peak production.

Butter prices increased by 4% also and we are now seeing GDT butter trading on a par with European butter at just over €7,000/t, which is a remarkable price.

European butter prices are at €7,095/t, whereas, for most of last year, there was over €1,000/t in the difference between the two.

Traditionally, a lot of US SMP made its way into China, so the retaliation by China on US tariffs has likely made GDT-based dairy products more attractive to Chinese buyers.

Meanwhile, on the European spot market, it was a bit more of a subdued week. Butter prices fell by €210/t and there was also a drop of €45/t recorded for WMP, while SMP remained the same.

It was better news for cheese, with cheddar prices increasing by €115/t to €4,890/t.