The futures market for whole milk powder (WMP) traded in New Zealand can act as a decent barometer or proxy for what will often happen at an upcoming GDT auction, given that many of the same buyers and sellers are involved.
WMP is the key commodity traded on the GDT, as it accounts for more than 50% of product traded on the auction platform. So a sharp increase or decrease in WMP selling prices at a GDT event is likely to have a significant bearing on the overall result.
Since the beginning of August, we have seen the GDT rally at three consecutive auctions. The benchmark dairy index has risen a cumulative 27% over those three auctions, with the rising price of milk powders a major driver behind this uplift.
However, while the GDT is the most widely reported event in dairy markets, WMP futures prices from New Zealand have been rising strongly since late July and effectively forecast the lift in the GDT. WMP futures rose in value by more than 33% from late July to the last GDT event two weeks ago.
However, in the last fortnight, the robust growth in WMP futures prices has tailed off somewhat, suggesting prices may be reaching a new level. October, November and December futures contracts for WMP have risen just over 4% in the last two weeks, indicating that the recent strong growth we have seen in the GDT may be plateauing.
Still, the futures market has moved higher since the last GDT, so it is likely we will see another positive result at this week’s GDT event scheduled for Tuesday.
Read more
Dairy trends: Dairy prices continue to firm but can it be sustained?
The five reasons why milk prices are improving
The futures market for whole milk powder (WMP) traded in New Zealand can act as a decent barometer or proxy for what will often happen at an upcoming GDT auction, given that many of the same buyers and sellers are involved.
WMP is the key commodity traded on the GDT, as it accounts for more than 50% of product traded on the auction platform. So a sharp increase or decrease in WMP selling prices at a GDT event is likely to have a significant bearing on the overall result.
Since the beginning of August, we have seen the GDT rally at three consecutive auctions. The benchmark dairy index has risen a cumulative 27% over those three auctions, with the rising price of milk powders a major driver behind this uplift.
However, while the GDT is the most widely reported event in dairy markets, WMP futures prices from New Zealand have been rising strongly since late July and effectively forecast the lift in the GDT. WMP futures rose in value by more than 33% from late July to the last GDT event two weeks ago.
However, in the last fortnight, the robust growth in WMP futures prices has tailed off somewhat, suggesting prices may be reaching a new level. October, November and December futures contracts for WMP have risen just over 4% in the last two weeks, indicating that the recent strong growth we have seen in the GDT may be plateauing.
Still, the futures market has moved higher since the last GDT, so it is likely we will see another positive result at this week’s GDT event scheduled for Tuesday.
Read more
Dairy trends: Dairy prices continue to firm but can it be sustained?
The five reasons why milk prices are improving
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