Futures prices for whole milk powder (WMP), a proxy for the performance of the biweekly GDT, have remained very consistent over the last fortnight, suggesting tomorrow’s GDT auction should return a steady result.
April, May and June futures contracts for WMP have been very steady over the last two weeks, improving by less than 1% in price, indicating Tuesday’s GDT auction should perform with some degree of stability.
WMP futures tend to be a decent gauge for the performance of an upcoming GDT auction, as WMP is the key commodity traded on the GDT, accounting for more than 50% of product sold.
Another steady performance at Tuesday’s GDT auction would reinforce the thinking that a floor has been reached in global dairy markets over the last month. While prices remain low, any degree of stability in the market must be welcome after months of volatility.
Global economy
The global economy started life in 2016 in turbulent fashion, with January proving to be a very difficult month. Oil prices plunged below $28/barrel, while there was incredible volatility in the world’s equity, bond and commodity markets.
However, Brent crude oil prices have recovered almost 50% in the last two months to climb above the $40/barrel mark for the first time since December, giving the impression the market has finally found a level. Investors and traders have begun unwinding bearish or short positions on oil, as the prospect of oil prices falling as low as $20/barrel diminishes.
If a floor has truly been put under the market and a real recovery in oil prices is on the way, there are positives for dairy markets in this. Since oil prices first began to fall in 2014, the buying power of oil-dependent economies has been severely curtailed.
Countries such Algeria, Libya, Nigeria, Iraq, Saudi Arabia and the United Arab Emirates are all major dairy importers and the dwindling oil price has made them less active in the market. And while $100/barrel still seems a long way off for oil prices, even the slightest recovery in prices will be welcomed by the oil-exporting nations of the world. Any recovery in the buying power of these markets is certainly welcome news for dairy markets.
Read more
Lower 2016 prices start to bite
GDT up as first signs of improved demand show
Futures prices for whole milk powder (WMP), a proxy for the performance of the biweekly GDT, have remained very consistent over the last fortnight, suggesting tomorrow’s GDT auction should return a steady result.
April, May and June futures contracts for WMP have been very steady over the last two weeks, improving by less than 1% in price, indicating Tuesday’s GDT auction should perform with some degree of stability.
WMP futures tend to be a decent gauge for the performance of an upcoming GDT auction, as WMP is the key commodity traded on the GDT, accounting for more than 50% of product sold.
Another steady performance at Tuesday’s GDT auction would reinforce the thinking that a floor has been reached in global dairy markets over the last month. While prices remain low, any degree of stability in the market must be welcome after months of volatility.
Global economy
The global economy started life in 2016 in turbulent fashion, with January proving to be a very difficult month. Oil prices plunged below $28/barrel, while there was incredible volatility in the world’s equity, bond and commodity markets.
However, Brent crude oil prices have recovered almost 50% in the last two months to climb above the $40/barrel mark for the first time since December, giving the impression the market has finally found a level. Investors and traders have begun unwinding bearish or short positions on oil, as the prospect of oil prices falling as low as $20/barrel diminishes.
If a floor has truly been put under the market and a real recovery in oil prices is on the way, there are positives for dairy markets in this. Since oil prices first began to fall in 2014, the buying power of oil-dependent economies has been severely curtailed.
Countries such Algeria, Libya, Nigeria, Iraq, Saudi Arabia and the United Arab Emirates are all major dairy importers and the dwindling oil price has made them less active in the market. And while $100/barrel still seems a long way off for oil prices, even the slightest recovery in prices will be welcomed by the oil-exporting nations of the world. Any recovery in the buying power of these markets is certainly welcome news for dairy markets.
Read more
Lower 2016 prices start to bite
GDT up as first signs of improved demand show
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