Inside Business Dairy
Seven-fold for the Global Dairy Trade
For the seventh time in a row, the Global Dairy Trade (GDT) has ended with a higher average quotation. In addition, the rise in the price was higher than most analysts had expected. This brings the GDT to the highest level since the spring of 2014.
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The average price on today's auction day (Tuesday, February 16) is $3.746 per tonne, an increase of 3% compared to the previous auction day of February 2. All auctioned products recorded a plus in the average price. However, the biggest driver behind the upward movement is whole milk powder. Where in Europe is the DCA listing for whole milk powder? already went up last week, following the New Zealand auction on Tuesday, this example.
Asian exports
Whole milk powder, with Fonterra as supplier, rose by an average of 4,3% in price to $3.615 per tonne. This means that the price of whole milk powder reached the highest point in the last 5 years. Fonterra can still sell whole milk powder well on the Asian market, and in particular China, where the dairy giant can compete well with the EU and the US in terms of price and logistical advantages.
While skimmed milk powder fell slightly in price in Europe last week, the average price on the GDT increased very slightly. Skimmed milk powder came to $3.207 per tonne, a plus of 0,3%. The price thus stabilized after a small downward correction on the previous auction day. In Europe, on the fat side, DCA quotations for butter, foil cheese and cheddar rose and a similar trend was also seen on the GDT. The average price of AMF, butter and cheddar increased by 1.1%, 2% and 2,4% respectively.
Prices rise in lockdowns
The higher prices on the GDT continue to stand out in light of the ongoing corona crisis. Lockdowns are still in place in many countries and destinations, which means that the sales potential due to the closure of the catering and food service industry cannot be fully utilized. Just as in the European market, many providers worldwide are spreading the risks by not only entering into long-term contracts, but also - more than before the corona crisis - entering into short-term agreements.
This can result in more volatility in the dairy market. The prospect of light slowly appearing on the horizon due to global vaccination programs could give the dairy market a boost. The volume traded on the GDT can also play a role. This traditionally falls again during this period to a low in the month of May, but the current levels are somewhat lower than the past 2 years.