A second consecutive price rise at the Global Dairy Trade (GDT) auction in New Zealand has renewed confidence that dairy markets have bottomed out.
Tuesday’s auction saw the index increase by 4.6%, driven by increased demand for whole milk powder (WMP), which is up 4.6%, skim milk powder (SMP), which is up 5.4%, and anhydrous milk fat, which is up 5.3%.
The only commodity to drop was cheddar, which decreased in price by 1.7%.
Another interesting aspect is the quantity of product being traded, with over 37,000t traded at this auction, which although similar to the last auction is much higher than normal. This indicates that there are fewer private transactions taking place, with more product funnelled through the auction.
There was further positivity on the European spot dairy markets, with WMP increasing by €55/t to €3,170/t, SMP increasing by €85/t to €2,235/t and butter by a significant €160/t to €4,520/t.
With both the GDT and the spot market prices rising, there’s renewed optimism that maybe the tide could be turning.
It remains to be seen how quickly supply will tail off in Europe, as prices continue to fall. But relatively benign weather across the continent and in the UK means more rather than less milk is likely. There was a bad drought across Europe and the UK this time last year.
What is happening in China is still a bit of a mystery. Rabobank is predicting that southeast Asia could present an opportunity for growth in exports.