On the back of the GDT rise again this week, I was asked what’s happening over in Asia and is this one of the reasons for the consistently improving dairy markets since mid-August.
The reality is it's part of the reason, but global milk supply is also back and this is underpinning the market in addition to Chinese demand.
The word from the market is that in northern Asia, Chinese dairy imports have been exceptionally strong this year. However, in recent weeks, there was actually some weakness.
The rate of buying eased in summer, with August volumes down year on year. COVID outbreaks and power shortages have impacted in recent weeks, according to sources.
In the south, imports fell again in August, which left volumes down slightly on a year-to-date basis. Overall, interest has been solid.
The most recent GDT auction was up another 1.4% this week. The Tuesday 7 December result underpins a rising market, despite good flows of milk at this time of the year from New Zealand.
Since mid-August, the GDT results have been steady or increasing. The auction two weeks ago was up 1.9%. Cumulatively since mid-August, the GDT results are up over 15%.
Whole milk powder (WMP), the most important product at the auction, was up 0.6% to reach over US$4,008 per tonne.
Butter was up over 4.6% to hit over $5,700/t. WMP prices on the European milk market observatory show they are heading for €4,000/t, up between 45% and 50% on the same time last year when they were trending close to €2,700/t.
Are they buying it all? No, but they are in the market and active and that soaks up a lot of the product from New Zealand and that tightens the global market for dairy commodities.