Average dairy prices dropped more than 5% at this week’s GDT auction in New Zealand to bring southern hemisphere markets back in line with European prices. The GDT dairy index was led lower by sharp falls in the price of milk powder.

The price of whole milk powder (WMP) corrected sharply at this week’s GDT auction, plunging 7% in value to just under $3,100/t (€2,780/t). It was a similar story for skimmed milk powder (SMP), with average prices falling 6% to just under $2,870/t (€2,570/t).

On the fats side, butter prices fell more than 2% this week to $3,890/t (€3,490/t), while anhydrous milk fat was generally steady at $4,865/t (€4,360/t). The price of cheddar cheese rose almost 2% to hit $3,870/t (€3,470/t).

Almost 36,000t of product were sold at this week’s GDT event as New Zealand enters into the second half of its milking season.

Europe

In Europe, dairy markets are holding steady this week. On cheese markets, cheddar prices are steady at €3,100/t, while returns for mozzarella are back slightly to €3,050/t.

Butter prices reported to the Dutch dairy board are unchanged at just under €3,600/t. On the powders side, SMP prices are also flat at €2,600/t, while the price of WMP is also unchanged at €3,130/t.

On the milk supply side, we could see higher production in Europe this coming spring. Milk prices are improving throughout the continent and farmers will react to this with higher production. Whether export demand can absorb this will be key.