Ahead of Tuesday’s GDT auction, dairy futures markets have softened somewhat in the last week. Since last Monday, the futures market for whole milk powder (WMP) has eased, with March, April and May contracts for WMP down a combined 4%.

While never set in stone, the WMP futures market acts as a decent bellwether for buyer sentiment. The futures market can be a decent way of gauging how an upcoming GDT auction will play out.

Based on this week’s fall in milk powder futures, we may see another drop in the selling price of WMP at the GDT. The price of WMP (green line) on the GDT index appears to have crested somewhat since average prices moved above $3,500/t in early December – the highest price point for WMP in over two years.

WMP prices have since retreated in the last month to settle under $3,300/t and Tuesday’s GDT auction could see a continuation of this trend. WMP is the most important commodity traded on the GDT index, as it accounts for more than 50% of product sales.

Read more

Dairy Trends: NZ dairy exports suggest China demand in strong

Higher US milk production and prices projected for 2017