The Global Dairy Trade (GDT) index lifted by 1.9% after Tuesday’s auction in New Zealand, with an average product price of $2,458/t. The lift in the GDT is the second consecutive increase in the index following drops in late October and all of November.

Butter led the individual product gains, with the average price increasing by 9% to more than $3,130/t. This was followed by strong gains in the average price of lactose (+6.8%) and anhydrous milk fat (+6.1%).

The average price of whole milk powder (WMP) increased by almost 2% to just over $2,300/t, which had been anticipated following recent gains in WMP futures contracts. On the NZX derivatives market, the New Zealand-based futures exchange, contracts for February 2016- and March 2016-delivered WMP have improved in price by as much as 6% in the last week, with strong demand from traders suggesting a rise in WMP prices was likely at this week’s GDT auction.

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WMP is the key commodity traded on the GDT auction and a significant driver of the index performance accounting for more than half the product sold.

Other dairy commodities to improve in average price included cheddar (+1.1%) and skimmed milk powder (SMP), which gained marginally by 0.2%.

There were declines in the average product price of rennet casein (-9.5%) and butter milk powder (-6.1%). However, both commodities account for just a fraction of the product sold on the GDT.

Volumes

The volume of product sold on the GDT continues to be low compared with previous years. Just under 25,000t of dairy commodities were sold during Tuesday’s auction, significantly down when compared with the more than 35,000t sold this time last year.

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