Price drops at the latest Global Dairy Trade (GDT) auction on Tuesday, plus further price drops on the European spot market, signals a further weakening of the dairy market.

In the New Zealand auction, the price index fell by 4.7% and it is now at the lowest level since November 2020.

Whole milk powder (WMP) took the largest hit, dropping by 5.2%, while butter fell by 3.3%.

The amount of product sold is lower than it has been for a while, with just over 23,000t sold, back from the 30,000t that’s normally moved – a sign of declining supply in New Zealand as the season wraps up.

Meanwhile, in Europe, spot prices continued to fall this week, with skim milk powder (SMP) taking the biggest hit, back 2.5% or €60/t compared with last week. Butter prices held fairly stable, only declining €10/t, while WMP was back €35/t.

Interestingly, demand for cheddar is looking better, with prices in Europe up €10/t, while prices in the GDT auction rose much further, gaining 3.8% in price compared with the last auction, which is worth €158/t in euro equivalents. Despite this GDT price rise for cheese, it’s still lagging the European spot price by about €200/t.

Where to next for farmgate milk prices? I see Fonterra has announced another drop in milk prices and talk in Ireland is that there are further price cuts to come here, if processors are to match current market returns to milk price. Perhaps in better news, milk supply in Ireland was back 1.7% in February and is unlikely to have picked up much in March with all the wet weather.