Inside Milk
Global Dairy Trade is a bit disappointing with a small minus
The Global Dairy Trade (GDT) ended slightly negative today (Tuesday 18 May) on the second auction day in May. For the third consecutive time, the average price came in slightly lower. The dairy market can therefore be regarded as stable, but rising dairy prices had actually been expected.
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The 284th auction day of the New Zealand GDT ended with a slightly declining Price Index of -0,2%. The average price was $4.150. This means that the dairy market has been very stable for over 1,5 months if we look at the rate of 4 auction days of the GDT from April 6. Then the price index rose by 0,3%, followed by 3 small falls of 0,1%, 0,7% and today 0,2%.
Outlook positive
The forecasts for this auction day were still favourable. Overall, in Northwest Europe, DCA dairy quotations have increased slightly in recent weeks the outlook for June is positive. And in New Zealand itself, the NZX futures market has generally been rising again in recent weeks, especially for whole milk powder and skimmed milk powder. While butter and butter concentrate (AMF), it must be said, remain under pressure.
The supply of 21.140 tons on this auction day of the GDT was also much higher than in the same period over the last 3 years, but virtually the same as the previous edition of Tuesday, May 4. Add to that the global increases in agricultural commodities, including rising oil prices, and the outlook looked bright.
Negatively out of tune
Bearing these principles in mind, the minimal price drop of whole milk powder was therefore negatively out of place. The whole milk powder index declined 0,2% to reach an average price of $4.123 per tonne. However, this was compensated by skimmed milk powder, which took up almost 20% of the supply. The skimmed milk powder index rose 0,7% to $3.447.
Just like the previous auction days, butter failed. Both the average price of butter and butter concentrate (AMF) recorded a minus. Butter fell by 2,2% to an average price of $4.929. AMF lost a handful of dollars per tonne at -0,1%. Finally, cheddar remained on the positive side of the score with a plus of 1% to $4.123.
Dive down
While summer is coming in Europe and lockdowns are gradually being relaxed, New Zealand will be entering the winter season in the coming months, with milk production plummeting. Whether these are the ingredients for an upward movement on the GDT will become clear in 2 weeks' time on the next auction day.