The GDT recorded a 0.5% decline at this week’s auction as Chinese buyers stepped out of the market compared with previous weeks.

The selling price of whole milk powder (WMP) was back 1% to less than $3,570/t. Skimmed milk powder (SMP) prices were flat at just over $2,600/t – likely not helped by the EU Commission’s decision this month to begin offloading the massive stocks of skim powder sitting in intervention.

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The EU placed 22,150t of its SMP intervention stock for sale by tender in the last month, which represents just over 6% of the total 350,000t of skim powder in intervention. However, just 40t of this 22,150t was actually sold, with the EU rejecting the majority of tendered offers, saying the bids were too low.

Despite this slow start, the EU will push ahead with the sale of more intervention product in the new year with tenders opening twice a month from January until the remaining 22,110t remaining on offer are sold.

While the GDT finishes 2016 on a downward note, overall dairy markets are in a much healthier position than this time last year.

In January, Chinese importers will be able to take advantage of lower import tariff rates set out in the New Zealand-China trade agreement and we are likely to see a major surge in import demand. Chinese buyers typically purchase 15% of all yearly imports in January and this is likely to help fuel further improvement in global dairy prices.