Better than expected Global Dairy Trade gain

Tuesday’s fourth-in-a-row rise in prices in the Global Dairy Trade (GDT) auction has been interpreted as a continuing price rally due to cyclone damage to pasture and crops in New Zealand, the world’s top dairy exporter.

New Zealand dominates the global trade in whole milk powders, and the price of this commodity increased by 5.2% in Tuesday’s auction.

This helped to lift the GDT Price Index 3.6%, despite futures markets indicating prices would increase no more than 2%.

According to the EU’s Milk Market Observatory, spot milk prices in the Netherlands and Italy have been stable in the last three weeks,

However, the big intervention store of skim milk powder continues to overhang the EU market, and the recent eighth tender attempt at the end of April to sell skim milk powder stocks once again resulted in no sales, even as stocks rose to 353,680 tonnes, with recent further buying in due to current market prices for skim powder being close to intervention levels.

The skim price index falling a further 0.9% in Tuesday’s GDT auction reflected the extent of the market slump for this commodity, which is so important for the EU dairy market.

On a brighter note for the EU dairy industry, there were signs this week of the market weakening in the US, which might stem the increasing flow of US product onto global markets.