Dairy markets continue to move in the right direction this week, as the Global Dairy Trade (GDT) recorded a 4.4% increase while the European spot market price increased for all key commodities also.
At the GDT, whole milk powder (WMP) increased by 4.8%, skim milk powder (SMP) increased by 6.6%, while anhydrous milk fat increased by 3.7% and butter by 1.3%.
These four products make up the bulk of all product passed through the auction, where volumes sold this week were up over 38,000t again.
It was also a good week on the European spot market, where WMP increased by €50/t, SMP by €85/t, butter by €140/t and cheddar cheese by €50/t.
This is the third consecutive week of dairy prices increasing on the spot market and the third consecutive price rise at the GDT.
The GDT has gained 11.7% in the last three auctions and while positive, the three good weeks are really only undoing the bad two weeks before where prices fell by 11.7%.
So where to now? While price rises are better than price falls, there is still no indication as to whether demand has increased because demand is being restored (eg China back in the market) or because prices fell so low that more low cost buyers entered the market.
We won’t know the full extent of this price rally for another month or two. We have had false dawns in the past and WMP is still lower now than it was in April, May or June.
It’s worth remembering that global supply is still running fairly static, so there is still too much milk in the world relative to demand.
Dairy markets continue to move in the right direction this week, as the Global Dairy Trade (GDT) recorded a 4.4% increase while the European spot market price increased for all key commodities also.
At the GDT, whole milk powder (WMP) increased by 4.8%, skim milk powder (SMP) increased by 6.6%, while anhydrous milk fat increased by 3.7% and butter by 1.3%.
These four products make up the bulk of all product passed through the auction, where volumes sold this week were up over 38,000t again.
It was also a good week on the European spot market, where WMP increased by €50/t, SMP by €85/t, butter by €140/t and cheddar cheese by €50/t.
This is the third consecutive week of dairy prices increasing on the spot market and the third consecutive price rise at the GDT.
The GDT has gained 11.7% in the last three auctions and while positive, the three good weeks are really only undoing the bad two weeks before where prices fell by 11.7%.
So where to now? While price rises are better than price falls, there is still no indication as to whether demand has increased because demand is being restored (eg China back in the market) or because prices fell so low that more low cost buyers entered the market.
We won’t know the full extent of this price rally for another month or two. We have had false dawns in the past and WMP is still lower now than it was in April, May or June.
It’s worth remembering that global supply is still running fairly static, so there is still too much milk in the world relative to demand.
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