With no material change in the supply or demand dynamics, it seems that trader sentiment has been the main driver of the fluctuations in dairy prices over the last three to four weeks.

The rally in European prices that we witnessed for the last few weeks, particularly in butter, took a tumble this week, with butter down €240/t, whole milk powder down €110/t, skim down €55 and cheddar down €115.

Meanwhile, at Tuesday’s GDT auction, prices more or less held steady, with the overall index down 0.7%, a bit better than a fortnight ago when it dropped 1.5%.

The key point here is that the steady gains in the dairy markets over the last month or six weeks seems to have stopped.

Some good news is that whole milk powder and butter prices were unchanged at the New Zealand auction and, at this stage, prices not falling is the next best thing to a price increase.

The overall tonnage of product sold was back to just over 26,700 tonnes, down about 11% on the previous auction.

A cautious economic outlook from China may not be helping matters, with the Beijing government announcing at the weekend that it expects 5% GDP growth for 2023, better than 2022, but still a long way behind the official targets.

The dairy industry needs China to re-emerge as big buyers of powder for there to be a tangible shift in the demand for dairy.

The long-awaited COVID bounce from China is yet to emerge. As things stand, dairy traders are just blowing hot and cold on the spot markets.