At last week’s event the GDT declined 3% bringing to an end a run of four consecutive increases for the benchmark dairy index. Most worryingly, the average selling price of whole milk powder (WMP) weakened 4% to $2,680/t, while skimmed milk powder (SMP) average prices fell back 4% to just over $2,200/t.

While the outcome of the latest GDT auction was disappointing given the recent period of strong growth, the result was somewhat telegraphed by futures markets with WMP futures falling more than 8% in the lead up to the GDT auction.

WMP is the most important commodity traded on the GDT accounting for about 50% of product sold and as such, the WMP futures market can act as a decent gauge for the performance of the twice monthly GDT auction.

Following the latest GDT result, the WMP futures market has slipped further and will be a cause of concern for those keeping a close eye on global dairy markets. In the last week, November, December and January futures contracts for WMP have declined another 3% in price.

As can be seen in the graph above, WMP futures have now slipped to their lowest point since early August suggesting that whole milk powder prices may have crested after weeks of buoyant growth.

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Dairy trends: GDT rally comes to an end

Dairy markets much improved but threats remain