Inside Business Dairy
Global Dairy Trade is up for the sixth time in a row
The Global Dairy Trade (GDT) on Tuesday, February 2, continues the upward trend of the past auction days. The average price rose for the sixth time in a row, bringing this indicator of the global dairy market to its highest mark since May 2014. With peaks for butter and whole milk powder.
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The average price on this auction day was $3.614 (US dollar) per tonne. The growth of 1,8% was later than the previous 2 auction days this year, when the value of products traded on the GDT increased by 4,8% (January 19) and 3,9% (January 5) respectively. A total of 28.707 tons of dairy products were sold, with the supply being almost 8% lower than the previous auction day. Whole milk powder and butter in particular were offered less frequently.
Whole milk powder rises
This change was also immediately reflected in the price. The price of whole milk powder rose 2,3% to $3.458, reaching its highest level since December 2016. Whole milk powder, offered by Fonterra, represents more than half of the last GDT by volume. Skimmed milk powder was one of the few products that had to suffer in terms of price and lost 1% to reach a price of $1,5 per tonne.
The sharp increase in the price of butter is also remarkable. Butter has been on the rise for some time and recorded the ninth price increase in a row, this time by 6,2% to $5.028 per tonne. On the fat side, AMF follows the lead of butter with a plus of 1,3% to $5.463 per tonne. Both butter and AMF are therefore at the highest price level in 1,5 years (July 2019). Cheddar is also making gains in value again with a plus of 2,3% to $4.178 per tonne.
Favorable sentiment
The main drivers behind the plus on the last auction day are undoubtedly the favorable sentiment on the global dairy market, which is also reflected in the European and Dutch markets. And this in a market that has to anticipate developments surrounding the coronavirus on a weekly basis, in which lockdowns and other restrictions apply in various sales markets. Measures that continue to frustrate some of the traditional sales channels for dairy, such as food service.
However, dairy traders and exporters appear to have found alternative sales channels. The export of dairy products, especially whole milk powder, from New Zealand to China also helps, of course. The rising quotations in New Zealand help to improve the competitive position of European dairy on the global market. Already after the previous auction day, butter exporters, for example, noticed that their product was better marketed.