Fonterra has reduced the volume of milk powder that will be offered for sale at this week’s GDT auction in New Zealand. The volume of whole milk powder (WMP) at this week’s GDT is back 3% to 12,500t, while skimmed powder (SMP) volumes are reduced 5% to less than 5,000t.

Fonterra said the reduced milk powder volumes was a result of the recent drought in New Zealand, which has negatively hit milk production. This reduction in powder volumes, coupled with the drop in milk supply caused by the recent drought, means this week’s GDT could see a rise in product prices.

Dairy markets remain cautious following the upturn in European milk production since September but the situation in New Zealand has raised doubts. Fonterra has issued several updates over recent months about the supply situation in New Zealand.

In its most recent update in late December, the dairy giant said it expects 2017/18 milk collections to be just under 1.5bn kilograms of milk solids (kg/MS) for this year, which would be down 3% on last year.