The GDT recorded its fourth consecutive increase at this week’s auction, with the benchmark dairy index rising 3.5%. Further gains in the average selling price of both skimmed (SMP) and whole milk powder (WMP) were the primary drivers of this latest increase.

The most important product traded on the GDT, WMP, saw average prices increase almost 5% to just below $3,600/t. This is the highest average price for WMP since June 2014.

Although less pronounced, the price of SMP also recorded gains this week, as average prices increased 1.4% to $2,570/t. This brings the price premium between SMP and WMP to more than $1,000/t.

While the GDT index is now at two-year highs, milk production in New Zealand is starting to fall at a dramatic pace.

Figures released this week show total milk collections in New Zealand for the month of October were down 5.5% compared with the same month last year to just over 3m tonnes. This is the lowest level of October milk collections in New Zealand since 2012.

October is the month of peak milk production in New Zealand and the decline in supply reflects the unseasonably wet weather the country experienced this spring.

The North Island, in particular, has been hard hit by heavy rainfall.

Speaking with farmers in the Waikato region this week, some have reported declines in milk output over 10% compared to 2015.

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