A 7.4% drop in the Global Dairy Trade (GDT) auction earlier this week was not the news that dairy farmers were hoping for.

The quantity sold of 33,997t was down slightly on the previous auction, with 151 participating bidders. Prices for both whole milk powder and skim milk powder were both down 8%.

The latest fall comes after prices were down on average 3.1% at the auction two weeks ago, although that was after four successive auctions when prices increased by 14.8%, 10.9%, 16.5% and 9.9%.

Commenting on the latest result, Lakeland chief executive Michael Hanley said it was important to set the two latest auction results against the significant increases at the previous four.

“The rate of increase at the previous four auctions was not sustainable,” he said. With the latest GDT price index still 46% higher than where it was at 1 August, Hanley emphasised that the market is now stronger than it was.

However, with global supply remaining ahead of demand, any significant increases in producer prices will not materialise until the supply and demand move into balance.

Joint ventures

On the issue of the joint ventures on dairy and feed businesses between Lakeland and Fane Valley, Hanley confirmed that the deals are on target to be complete by the year end.

“It is a big transaction and it will take time, but it is progressing extremely well,” he said.