The outlook for finely balanced dairy markets through 2018 is looking increasingly positive after a third consecutive price increase at this week’s GDT auction. Prices rose across all products tendered with the index price rising by 5.9% to US $3,553.

On conversion to sterling and allowing for processing and transport costs, the GDT index converts to a farmgate price of approximately 29p/l.

Further increases in commodity prices at this week’s GDT auction sends a positive message to the sector.

The latest forward contracts effectively relate to the period of peak production in key EU regions. The stronger sentiment should help stabilise the market through this period.

Key to the higher prices is drought in New Zealand, which again resulted in reduced quantities of dairy commodities being traded at this week’s GDT auction.

Butter rose 7.9% with cheddar up 7.2%. Whole milk powder (WMP) rose 7.6% with skim up 7.2%.

Dutch auction

The positive outcome from the GDT filtered through to this week’s Dutch Dairy Board auction where prices for butter rose by €40/t to €4,210. This is the third consecutive week butter prices have increased.

Prices for WMP have also strengthened this week with a €40/t increase, bringing current values to €2,560/t.

WMP prices have increased for the fourth week in succession and are now €140/t higher than where they started off in 2018. However, skim milk powder prices remained static.

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