The average Global Dairy Trade (GDT) auction result was up 15% this week. It was the eighth consecutive increase in auction results for dairy ingredients on the platform.
The GDT is a good indicator of global whole milk powder prices and Chinese demand for dairy product from New Zealand.
Whole milk powder was up 21% on the last auction to $4,363/t (€3,617). Cumulatively, the average auction results were up 20.9% over the seven previous auctions from mid-November. The auction prices have risen by 35% since mid-November.
Some Irish co-ops lifted milk price by 0.5 c/l for January, but farmers will be expecting a bigger rise for February milk price, which will be set in the next 10 days.
Sources say the GDT increase is primarily demand-driven by Chinese and southeast Asia.
In a note to Fonterra suppliers, its CEO Miles Hurrell said they are trying to understand future demand and, while the GDT result is one key input on farmgate price, there are other factors to consider such as currency and COVID-19.
IFA dairy chair Stephen Arthur said Irish co-ops cannot ignore the trends in the latest GDT auction.
“This rise in commodity prices is equivalent to a farmgate price of over 40c/l for farmers. As we approach peak, we will not tolerate processors playing down the price. There is plenty of scope for a milk price to rise in the next few months,” he said.
ICMSA dairy chair Ger Quain said the GDT placed the recent steady milk price increases “in the shade” and made an overwhelming case for a farmer price increase for February milk.