Average prices rose by 3.8% to a little over $2,260/t at this week’s GDT auction in New Zealand – the second straight increase in average prices at the benchmark dairy index, but just the third positive result since the beginning of 2016. This latest increase was driven by whole milk powder (WMP), the key dairy commodity traded on the auction platform, with prices up 7.5% on average.

There were also increases in the average selling price of lactose (+8%), casein (+7.5%), butter (+2%), butter milk powder (+2.4%) and anhydrous milk fat (+1.6%). The average price of skimmed milk powder, which accounts for almost a quarter of product sales on the auction platform, increased marginally (+0.3%).

The only commodity to record a decline in the average selling price was cheddar, which was back almost 4%. The volume of product sold at the GDT remains low with just over 21,200t sold via the auction platform this week.

In Europe, price quotes from the Dutch dairy board for butter and WMP remain weak. Since the start of 2016, butter prices are back more than 16% to €2,370/t, while WMP is back 18% to €1,720/t.

China demand

Meanwhile, the French dairy giant Danone this week reported sales growth of its infant formula range in China, the world’s largest market for baby powder. Danone said infant formula sales in China for the first three months of 2016 had returned to positive growth, which it attributed to strong demand for its range of trusted, imported brands.

In its outlook for the rest of the year, Danone said it expected raw material costs, including milk, to trend upwards over the course of 2016. It added that lower milk prices in Europe and the US in the first half of the year should “edge up” or rebound in the second half of 2016.