For the first time in five auctions, New Zealand’s Global Dairy Trade (GDT) auction rose again this week.

Small volumes were traded, but the average result was up 1.5%, with butter and skim milk powder (SMP) driving the averages up.

Whole milk powder (WMP) was still down a touch (0.3%), but the overall stalling of the decline is still positive and shows the floor in the market for now.

The milk supply still dominates decisions, with global flows down again in April (-1.3%). The rate of decline was sharper versus March, but, remember, this was compared with a strong 2021 base.

The expectation from the industry as we enter mid-June is that collections will be negative in the first half of the year before recovering to some extent in the second half, but this will depend a lot on weather in various parts of the world.

Flat supply

Overall annual milk supply is likely to be flat and could very easily be negative.

Cheese and butter markets were quiet after Easter and into May, but interest picked up with buyers looking to cover quarter three needs.

Interest for SMP also improved, though some sources say sentiment is not as strong as cheese and butter with weaker global export demand. Indeed, Chinese imports have eased, which is placing some pressure on global powder prices, particularly WMP.

China and the ongoing move out of COVID-19 will still play a big part for 2022, as will the higher retail prices in supermarkets on sales.