The New Zealand Global Dairy Trade (GDT) auction results were back again this week, with a 4.6% fall on top of the 3.5% fall two weeks ago.
This means results are over 8% down for October alone.
Powders are getting hit hard, with skim milk powder (SMP) getting hit hard, down 6.9%, and whole milk powder (WMP) down 4.4%.
This weak market sentiment that was taking hold was delivered with the GDT result.
The price trend of dairy commodities has been downward since March and April when we look back at GDT results.
The results are the lowest prices for SMP for more than a year and means it returns to below the price of full fat product again, which makes sense.
So why the downturn for the last two weeks and will it be sustained? There are probably increasing recession fears in some parts of the world and no doubt there is some impact on product demand of the higher cost of food at retail level.
China is the key player in New Zealand (NZ) markets. NZ milk supply peaks around now also, meaning traders know they will get SMP at lower prices.
On European markets, SMP dropped to around €3,500/t. Unlike NZ, this isn’t the lowest price, because prices rallied in August and September.
In cheese markets, there is stability, as mozzarella prices had dropped a touch already, but overall demand is still good. Quotes for butter are steady. Cream and spot milk dropped, meaning there is plenty of milk around.