The GDT auction result this week was down a shade (1%) to average $3,784/t.
July and August are traditionally the weaker months for the auction, as New Zealand milk just starts to flow on many farms.
July volumes sold through the auction were the lowest for years.
Whole milk powder (WMP), the most significant product traded on the exchange, was down 3.8% to finish at €3,598/t.
Skim milk powder (SMP), butter and cheddar were all up in price.
While the results have been trending downward for the last eight auctions, it is important to note that since March it is coming down from the highest price it has been since 2013. The latest auction results remain about 20% ahead of where they have been in August for the last three years.
Cheese, particularly cheddar, was lagging behind the market, but is catching up in recent weeks. Recent European prices are also trending down.
Given the logistical problems in the UK for food producers you could see cheddar prices improving. Meat protein, particularly chicken, is in short supply in the UK and some are suggesting a chicken price rise could see a positive knock-on effect on cheddar demand.
Milk supplies are very variable across Europe, with some parts suffering from summer drought in key milk producing regions, which is tightening supplies. On top of this, with the high cost of feed the milk to feed price ratio means it doesn’t make sense to feed more concentrates.
June saw another bumper set of dairy imports into China. The total of 310,000t set a new record and was 57,000t and 22.5% more than last year.
WMP saw an 87% rise to 67,800t.