The dairy trade news of interest this week is the result from the latest Global Dairy Trade (GDT) auction, which shows a fall for all products of 7.9% on average. This is the third consecutive price drop in the auction since the end of October.

The average price across all products was $2,345/t, down $224 on the last result. Whole milk powder prices dropped substantially, by 11%, a good deal more than was predicted by NZ whole milk powder futures last week. The next biggest drop was for skimmed milk powder, which saw a drop of 8.1%. This was followed by anhydrous milk fat (5.9%) and cheddar (5%).

In contrast to cheese and milk powders, butter is enjoying better fortune and this was reflected with a 5.6% rise to $2,709/t.

There were 141 participating bidders at the auction on Tuesday, with 13 bidding rounds and 30,044m tonnes of quantity sold. The quantity is down over 20,000t on this time last year. This is the third consecutive drop in the average price at the auction since 20 October 2015.

All eyes are still on New Zealand in terms of supply (see separate reports in news and dairy pages 36-38). El Nino still presents a risk to New Zealand’s supplies in the high-output months of December to February. Indications are that it will be strong this year, but the specific impact on volumes is not yet known.

European supply is ticking along nicely, mainly from Ireland and the Netherlands. Poland and Denmark are also undergoing a structural uplift in milk production. The added European volumes have come at a point when some expected supplies to decrease, because of lower prices paid. Rate of buying traditionally slows down in the run-up to Christmas, while key buying events for the of Chinese and Algerian markets have also passed.