Inside Business Dairy
Global Dairy Trade gains for the first time since April
After 8 auction days with an average price drop, the Global Dairy Trade (GDT) on Tuesday 17 August ended with a small plus. With this, the GDT is sending a positive signal to the global dairy market for the first time since April 6 of this year. The pacesetters behind this modest upward movement were mainly butter and skimmed milk powder.
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The average price index of the 290th auction day of the GDT ultimately amounted to US $3.827 per ton on Tuesday, an increase of 0,3% compared to the previous auction day of Tuesday, August 3. The 8 auction days before today's, the GDT had to take a huge loss, ranging from -0,1% to -3,6%. Yet analysts had not really taken into account, looking at developments in the futures markets.
No clear upward trend
In New Zealand, for example, butter and skimmed milk powder are still under pressure on the NZX, while the CME in Chicago is certainly not showing a clear upward trend. On the European market, the DCA quotations made it clear last week that prices on the dairy market are trending upward again. In addition, milk production in New Zealand has been low in recent months, now that it is winter there.
Supplier Fonterra had also reduced the supply of whole and skimmed milk powder, while buttermilk powder (BMP) was not offered at all. As a result, the total supply of dairy products was almost 7% lower than the auction day before. For whole milk powder, this did not lead to an increase in the average price. The value of whole milk powder, which accounted for more than half of the GDT in terms of volume, averaged $3.552 per tonne, a decrease of -1,5%.
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Butter on the rise
In addition to skimmed milk powder, it was precisely the pricing on the fat side of the dairy market that helped the GDT rise. Skimmed milk powder rose by an average of 1,1% in price to $3.052 per tonne. Butter continued its upward trend from the previous auction day with an average price of $4.771 per tonne, an increase of 4%. Butter concentrate (AMF) has also increased in value and amounted to €5.791 per tonne, a growth of 1,5%. Finally, cheddar rose 2,8% in price to $4.184 per tonne. It remains to be mentioned that lactose, which was offered in a minimal volume, remained virtually the same in price.
Because the dairy markets (US, Europe, New Zealand) show conflicting signals worldwide, it is difficult to identify a trend. The effect of the corona pandemic remains an indispensable variable in expectations on the dairy market, just like the purchasing power and purchasing appetite of a major buyer such as China. The new DCA quotations that will be published next Thursday may provide more direction as far as the European dairy market is concerned.