The flat Global Dairy Trade (GDT) auction showing just a 0.1% gain in the index belies the true volatility at the auction.
Whole milk powder (WMP), the main product sold at the GDT, had a big correction, declining by 4%.
On the other hand, skim milk powder (SMP), the second-biggest product category sold at the auction, increased in price by 5.2%. This effectively cancels each other out.
Anhydrous milk fat (AMF), which is butter oil, increased by a staggering 6.4% to reach €6,623/t.
There have only been a handful of times in the last five years that AMF has been higher than this.
In contrast, butter itself dropped by 0.9% at the latest auction, while cheddar and mozzarella were stable.
The differences in fortunes depending on the product shows the volatility in the market at present.
The Middle Eastern conflict is also weighing on the market.
Any of the Irish dairy processors that have announced a milk price for February have referenced that the conflict could reduce demand for dairy in the region.
There’s no doubt that shipping is being disrupted and shipping costs are going to increase by quite a bit due to the increase in the price of oil.
It used always be said that high oil prices are good for demand in the Middle East, but that may not be true now.
Oil prices are high because oil cannot leave the Middle East, so the region is not benefitting from the high oil prices.
Generally speaking though, in times of uncertainty, demand for food goes up.
That is why the big drop for WMP at the GDT auction is surprising.
The flat Global Dairy Trade (GDT) auction showing just a 0.1% gain in the index belies the true volatility at the auction.
Whole milk powder (WMP), the main product sold at the GDT, had a big correction, declining by 4%.
On the other hand, skim milk powder (SMP), the second-biggest product category sold at the auction, increased in price by 5.2%. This effectively cancels each other out.
Anhydrous milk fat (AMF), which is butter oil, increased by a staggering 6.4% to reach €6,623/t.
There have only been a handful of times in the last five years that AMF has been higher than this.
In contrast, butter itself dropped by 0.9% at the latest auction, while cheddar and mozzarella were stable.
The differences in fortunes depending on the product shows the volatility in the market at present.
The Middle Eastern conflict is also weighing on the market.
Any of the Irish dairy processors that have announced a milk price for February have referenced that the conflict could reduce demand for dairy in the region.
There’s no doubt that shipping is being disrupted and shipping costs are going to increase by quite a bit due to the increase in the price of oil.
It used always be said that high oil prices are good for demand in the Middle East, but that may not be true now.
Oil prices are high because oil cannot leave the Middle East, so the region is not benefitting from the high oil prices.
Generally speaking though, in times of uncertainty, demand for food goes up.
That is why the big drop for WMP at the GDT auction is surprising.
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