June, July and August contracts for whole milk powder (WMP) have been unsettled over the last week, leading to uncertainty as to what direction prices will move at Tuesday’s global dairy trade (GDT) event.

At the close of trade in New Zealand markets (NZX) on Monday, futures prices for WMP recorded a 2% fall in price from the week prior.

The next GDT sale is due to take place on Tuesday 16 May and while never set in stone, the futures market for WMP can act as a decent bell weather for buyer sentiment in global dairy markets. This week’s futures market provides a downbeat forecast for this GDT event.

As can be seen from the red line in the graph below, the futures market price for WMP has fallen this week on the back of recent strong performances over the last month.

On a positive note for dairy prices, milk production in New Zealand is struggling to find its feet after a spate of hurricanes in the world’s top dairy exporter reduced the availability of pasture and, in turn, slowed production.

At the last GDT, the price index recorded an increase of 3.6% – its fourth consecutive rise. WMP prices at the trade jumped 5.2% to $3,233/t, while skim milk powder (SMP) prices fell marginally by 0.9% to $1,982/t.

Butter has become an important commodity for the Irish dairy industry in recent months, with Ireland emerging as the largest exporter of butter in the EU.

At the last GDT, butter and butter milk powder showed increases of 1.2% and 8.4% respectively. With this in mind, the Irish dairy industry should hold one eye on the performance of butter at Tuesday’s GDT.

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SMP volumes put back into intervention

Global report - 11 May