After two relatively minor downward corrections, the Global Dairy Trade (GDT) result took a firm move downwards on Tuesday 19 April.

The New Zealand internet auction is usually a good barometer for the European dairy market, especially for whole milk powders, so we will see if this holds up in the coming weeks.

The average price index fell by 3.6% on Tuesday. A fall was on the cards, as supply was up for this auction, the first time this happened since the start of the year. In effect, Fonterra is saying it will meet more demand if that what the market wants.

Of course, we all saw over the weekend that China and some of the major cities there are effectively in COVID lockdown and I am sure that also impacts on dairy commodity demand. If not demand, then sentiment is affected.

The war between Russia and Ukraine will obviously also play a role. For Fonterra, the world’s largest dairy exporter, these developments have an effect on the export potential of the powders.

Because Fonterra is heavily vested in the Chinese and Asian markets, it will be keen to move product, whereas the European market is probably more diversified and insulated than New Zealand and won’t respond as quickly to this market sentiment. New Zealand still suggest 2022 will be very positive for global dairy markets.

The average price of whole milk powder, responsible for more than 55% of supply, fell 4.4% to US$4,207/t.

Skimmed milk powder lost 4.2% to $4,408/t. Butter products also recorded red figures.