Inside Milk
Extreme Price Rises on Global Dairy Trade
Just as dairy prices - after a fierce rally - appeared to be leveling off, the Global Dairy Trade in New Zealand is skyrocketing. This gives the market a new impulse. Especially the price increase of Cheddar in unbelievably large. What does this mean for the European market?
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Cheddar increased yesterday (Tuesday, November 2) on auction day by 14,1% to US $5,058 per tonne. Such large price increases are rare. Never before has the GDT quotation for cheddar been so high. Skimmed milk powder also shows significant price increases, from 6,6% to $3,627. This is also a record since the GDT started in 2017. With a plus of 2,7% to $3,921, whole milk powder slowed down a bit.
We also see higher prices in milk fat. For example, butter and AMF both show an increase of more than 4% to $5,350 and $6,384 per tonne respectively. The higher prices increased the average price by 4,3% to $4,207. This is the highest level in 8 months. The traded volume remained just below 30.000 tons, the highest level since last January.
Less milk and Chinese demand
The price explosion is quite unexpected. This is because the dairy market has already shown strong growth in recent months. Many insiders expected that the end of the matter was now over. The main driver behind the advance is the disappointing milk production in New Zealand, as a result of the cold and wet spring. In August milk supply was almost 5% lower than last year.
The auction result also shows that China is still 'in the market', although the thought was that the Asian country was now reasonably covered in its dairy needs. In any case, the GDT is causing commotion on the European dairy market. Whether this will also lead to further price increases will become clear in the coming days when the DCA dairy quotations are published again on Thursday.