The downward trend for dairy commodities continued in the first Global Dairy Trade (GDT) auction of 2023.
The positive angle of the result is that whole milk powder didn’t fall as much as skimmed milk powder.
The negative angle is that skimmed milk powder in particular took a pretty heavy fall.
January is normally a time when the Chinese are in the market looking for product and while they are, the volumes – given the COVID-19 impact on Chinese cities – is still limiting buying patterns.
The result of the January New Zealand-based GDT auction confirms that the trend will remain downwards in the new year. The average price dropped by 2.8% to $3,365/t. This is the lowest level for more than two years.
As discussed here previously, price pressure is a combination of factors.
Milk growth in the European Union and the United States combined with a drop in demand on consumer markets due to high inflation.
In addition, the unrest in China around COVID-19 continues.
The 1.4% decline for whole milk powder to $3.208/t is not as bad as some feared it might be. Cheddar and butter are also down. Butter fell 2.8% to $4,479/t, while cheddar lost 2.7% to $4,690/t.
The results of the GDT will have an impact across the dairy world and shows the significance of the Chinese purchasing power on the dairy sector.
The hope is that this result is because this auction happens when many traders are still on holidays.