Global dairy market blip surprises industry

The Global Dairy Trade auction on October 17 will be closely watched by all in the dairy industry, for signs of a weakening global market, following a surprise 2.4% fall in the overall GDT price index at last Tuesday’s auction, writes Stephen Cadogan.

Futures markets had anticipated a strong lift in prices on Tuesday.

Instead, the global dairy industry was surprised by the biggest index fall in more than six months.

The GDT auction on October 17 will help to explain if Tuesday’s price drop was due to the large volume of product on offer, which was the highest in more than a year.

The 37,990 tonnes sold at the auction was 11.4% up from the previous auction on September 19.

However, some market analysts said the result may point to weaker demand and stronger supply.

However, supply has been held back by New Zealand milk production in August falling 2% behind last year’s level, due to recent wet weather.

This trend will continue unless the country’s weather conditions improve soon.

Combined world milk production grew by 0.17% in the January to July period, compared to 2016, mainly fuelled by the US.

Global exports expanded in July by 6% (milk equivalent).

China led the growth in global imports, buying 27% more than in 2016, while Southeast Asia has increased imports 12%.

According to the European Commission, continuing strong demand in China and South East Asia would help to absorb some of the increasing volumes of dairy product.

EU exports have performed well, especially of cheese and skim milk powder, but are getting increasingly difficult, due to the stronger euro and weaker dollar, and competition from the US and New Zealand.

The EU is currently the most expensive source for dairy commodities.

How these trends are moving may become clearer in the Global Dairy Trade auction on October 17, which will be of particular interest to the industry in Ireland, which leads EU milk production growth in 2017, with a 7.4% increase so far this year.

More in this Section

Marriage usually revokes a will, but divorce does not

Prosperous 2017 for dairy farmers but low incomes persist for most farmers

Cow’s blood saved weanling after dehorning

101-acre farm with multiple assets has €2 million price tag


Today's Stories

Warning as number of steroids seized surges 300%

ECB: Ireland’s Central Bank must enforce tracker mortgage redress

Ryanair pilots call off strike

Man entered Garda station with knives

Lifestyle

Review: N.E.R.D - No One Ever Really Dies: Their finest album to date

Everyone's mad at Google - Sundar Pichai has to fix it

Scenes from the analogue city - Memories of Limerick from the late 80s and early 90s

Ask Audrey: 'I heard that Viagra fumes from Pfizer’s were causing stiffys below in Ringaskiddy'

More From The Irish Examiner