The gap between spot trading prices for New Zealand dairy products and similar products in Europe and the US has widened with further grim results at the Global Dairy Trade (GDT) internet auction this week.

Spot New Zealand skimmed milk powder (SMP) this week was trading at around $500/t less than EU product, while NZ butter was reported to be selling at $2,000/t below US butter.

Officially quoted Dutch dairy prices on Wednesday were down by between €20/t and €70/t.

Butter was quoted at €2,690/t (down by €70), full fat milk powder €1,870/t (down by €50), SMP food grade €1,660/t (down €20) and SMP feed grade €1,470/t (down by €40).

The current intervention price for SMP is €1,698/t and European traders indicate that they are buying old stock (ineligible for intervention) at €1,540/t. This is still well above the GDT price levels of US€1,340/t to €1,520/t.

The GDT price index fell to its lowest ever level at Tuesday’s auction, down by 9.3% on the sale three weeks ago. It was the tenth consecutive decrease, with very large falls for milk powder.

The average price for SMP was down by 14.4% and whole milk powder fell by 10.3%. Butter dropped by 6.1% and anhydrous milk fat (AMF – butteroil) down by 11.7%.

These commodities accounted for the majority of the 46,527t of product sold on contracts to be delivered between September 2015 and February 2016.

That followed efforts by New Zealand’s giant Fonterra co-op to limit the tonnage offered as they sought direct sales wherever they could at prices that undercut trade in other parts of the world.

All of this is continuing to depress global markets, with worries that the next GDT auction will be another very difficult one.