Powders continued their positive trajectory at this week’s Global Dairy Trade (GDT) auction, with skim milk powder (SMP) jumping 7.6% to €3,021/t and whole milk powder (WMP) rising 3% to €3,098/t.

Cheddar remained relatively steady, increasing 0.6% to €3,230/t, while fat-based products declined following a poor performance at the previous auction.

Butter fell 2% to €4,391/t, although it continues to trade well above European butter prices.

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The average GDT price index rose 2.3%, which is the biggest increase since March.

There was a strong Chinese presence, with buyers from the country accounting for almost half of the GDT offering. China is a major buyer of SMP and strong purchasing activity helped drive the increase in powder prices.

Despite another high volume of product being offered, demand remained robust.

Alongside China, international purchasers are preparing for tightening supplies later in the year, due to ongoing drought in Europe and the El Nino in the southern hemisphere.

El Nino is a weather pattern causing unsually dry and warm temperatures and is expected to affect New Zealand and Australia later this year.

Europe

European commodity markets were also positive this week.

Butter increased by €100/t to €4,000/t, leaving it €400/t higher than seven weeks ago.

Over the same period, SMP has risen €330/t to €2,925/t, while WMP has gained €480/t to €3,565/t.

European spot milk prices have also climbed by 3c to 6c/l and now exceed 40c/l, reflecting tightening drought-affected milk supplies.