Analysis dairy market
Final piece Global Dairy Trade gives mixed picture
During the last Global Dairy Trade (GDT) of this year, the average price slows down. This is mainly due to a significant drop in the whole milk powder quotation. Skimmed milk powder, cheddar and butter continue to increase in value.
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When screening the auction results organized by dairy giant Fonterra, the drop in the average price is striking: it falls by 1,5% to $4.236 per tonne. It is the first decline since early August. When we look underlyingly, a mixed picture emerges.
Correction for whole milk powder
For example, the price of whole milk powder drops by as much as 3,3% to $3.867 per tonne. This can be seen as a correction to previous price increases, probably prompted by increased supply. New Zealand has just passed the seasonal peak of milk production and the majority of the supply is pulverized one by one. In addition, China takes considerably less milk powder now that the country appears to have its strategic food reserves in order. New Zealand is highly dependent on the import whims of the Asian country.
European butter is now quite expensive
The other traded dairy products all turn green, although the positives are modest. Skimmed milk powder rose 0,6% to $3.745 per tonne. Butter rose 1% to $5.851. This means that the listing has slowed down compared to the price spurt that we recently saw on the European market. Expressed in dollars, Europe's competitive disadvantage on the world market is now almost $1.000. Earlier this year the tables were turned and New Zealand products were significantly more expensive.
GDT up 25% this year
Now that the last auction of 2021 is a fact, we can also take stock. The average price increased by almost 25% to $4.236 per tonne between January and December. This increase means that the milk price of Fonterra is heading for a new record. Other processors in the country also pay high milk prices.