This week’s GDT auction in New Zealand felt like an important one. It certainly paints a telling picture of where global dairy market sentiment is at right now.

Just last week, figures from New Zealand showed milk production was down almost 2% for September to 2.4bn litres, which illustrates the impact the bad spring weather is having on supply.

It’s important to note that this decline in September production in New Zealand is in comparison with the same month last year, when milk prices were on the floor and farmers were culling numbers.

Despite these declines in supply in New Zealand, which accounts for 25% of the global dairy exports, markets remain bearish and most commodity prices are falling. At this week’s GDT auction in New Zealand, average prices fell 3.5%, which is the third consecutive decline in the benchmark dairy index.

The most notable result from this week’s GDT was the major drop in the price of whole milk powder (WMP).

Average prices plunged almost 6% to $2,850/t (€2,460/t) following similar weakness in European powder prices over the last fortnight. Skimmed milk powder (SMP) recorded a slight increase in price (+1%) to just over $1,800/t (€1,570/t), but overall prices remain on the floor.

On the fats side, butter mirrored the recent negative trend in Europe, with prices falling 4% at this week’s GDT to below $5,520/t (€4,755/t), while cheddar prices fell 3% to $4,000/t (€3,450/t).