The GDT finished the year on a downbeat note as average dairy prices dropped almost 4% at this week’s auction in New Zealand.
Once again, weakness in milk powder prices dragged the benchmark dairy index lower.
Whole milk powder (WMP) dropped almost 3% to $2,755/t (€2,335/t), which is the lowest level prices have been at since October 2016. On the skimmed milk powder (SMP) side, average prices plunged almost 5% to their weakest point in close to two years at $1,675/t (€1,420/t).
This new price floor mirrors exactly what’s happening in Europe where SMP prices continue to drop to record lows. Casein prices declined more than 6% to a little over $4,500/t (€3,815/t).
On the fats side, butter prices weakened more than 2% to $4,475/t (€3,790/t), while cheddar prices fell sharply by 8% below $3,400/t (€2,870/t). The price of anhydrous milk fat (AMF) fell 7% to $6,400/t (€5,410/t).
This week’s negative result from the GDT is in keeping with the recent mood of dairy markets. Since October, five of the last six GDT auctions have seen average dairy commodity prices fall as markets take a dim view of a rising tide of milk production around the world.
Figures released this week show New Zealand milk production for November was just under 2.9bn litres, which is 4% higher than this time last year.
New Zealand milk supplies for the first six months of the 2017/18 season (June to November) are 1.8% ahead of last year at 10bn litres.