Tuesday’s Global Dairy Trade (GDT) auction saw a 3.6% drop in the New Zealand-based price index. As usual, the biggest product traded was whole milk powder (WMP), which recorded a 3% drop in price to $3,864/t, followed by skim milk powder (SMP), which recorded a 7% drop to $3,126/t.
In total, there was just over 24,000t of product traded. Cheddar prices fell by 9.2%, but, as usual, the quantities traded were small.
The 3.6% drop follows a number of consecutive drops in the index since its recent peak in early March.
Despite the drop, dairy prices remain historically high due to strong global demand, particularly from China.
Prior to the most recent peak, the last time the index was this high was in 2014.
The Ornua PPI for the month of June is up to 119.9 from 116.8 for May. When you include the Ornua value payment, it works out at the equivalent of 36.1c/l excl VAT for June, up from 35.1c/l in May.
Speaking at the Pasture Summit on Wednesday, Ornua CEO John Jordan highlighted the growth in demand for dairy as a response to the health implications of COVID-19.
This is particularly obvious in China, where the government there has been encouraging people to drink more milk to improve their immunity. Jordan suggested that dairy markets would remain strong, particularly for grass fed products.
Another factor in strong prices is the relative stagnation in milk supply.
In the EU, Germany, the Netherlands and Denmark are all on a par with last year for May and June supply, but supply is down in France.