The ‘good run’ of Global Dairy Trade (GDT) auction results came to an end this week, with the index falling by 0.9% at Tuesday’s auction.

It’s not a big drop and the quantity of product sold is not that high at about 23,000t, but it’s not the signal that the market wanted.

To delve deeper, butter increased by 2.2% and whole milk powder (WMP) increased 0.3%, with the main drops seen in skim milk powder (SMP), which fell in value by 1.6%, but makes up about one quarter of all product sold through the auction, so has a big bearing on the overall index. Anhydrous milk fat fell by 4.5% and cheddar fell by 3.4%.

It’s an indicator that demand for dairy is still in the doldrums. The price increases of the previous two auctions haven’t been eroded, nor have they been built on.

It shows that demand is still weak in that part of the world for dairy products.

Meanwhile, on the European spot market, things are looking a bit better, with prices rising or steady across the basket of goods we’re most interested in.

Spot market prices for butter increased by €70/t this week, while WMP increased by just €10/t and there was no change to SMP prices. Cheese prices on the other hand increased, with cheddar up €50/t.

There are some indications that milk supply in Europe is starting to tail off, having reached its seasonal peak, but with good weather and good feed, it looks like supply will have been up compared with this time last year.

This extra supply will not be helping the supply/demand dynamic.