Despite bullish dairy farmer sentiment, international dairy markets have become increasingly choppy as we enter the back end of the year.

October and November in particular proved to be difficult months for the GDT index, with dairy commodity prices falling a cumulative 10% over four auctions.

Farmers and dairy commodity sellers were granted a reprieve this week, as the GDT ship was steadied somewhat. Average selling prices at the benchmark dairy index recorded a slight improvement of 0.4%, with just under 30,000t of product sold.

There was improvement across the board in milk powder prices. Whole milk powder (WMP) increased almost 2% to $2,830/t (€2,400/t), while the price of skimmed milk powder (SMP) lifted 5% to $1,775/t (€1,500/t).

On the fats side, the price of New Zealand butter continues to decline, with prices falling a whopping 11% this week to $4,575/t (€3,875/t). This is the fifth GDT auction in a row that butter prices have fallen after peaking in late September at $6,000/t (€5,100/t). Cheddar prices fell 4% this week below $3,700/t (€3,130/t).

Given the negative shift in sentiment in dairy markets over recent months, it is expected New Zealand dairy giant Fonterra will lower its forecast milk price for the 2017/18 milking season from 27.1c/litre ($6.75/kg of milk solids) to a new forecast of 26.1c/litre ($6.50/kg of milk solids).

In Europe, the price of butter declined 5% this week to €4,660/t. On the powders side, WMP prices fell below €2,500/t, while SMP prices found a new low of €1,450/t.