Analysis dairy market
Global Dairy Trade shows trend break(you)
The advance shown by the Global Dairy Trade in recent months has ended today (March 15). During the second dairy auction in March, the average price shows a slight decrease and thus a break in the trend. Or at least a fraction. This does not alter the fact that some manufacturers continue to improve.
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After a months-long rise, it takes some getting used to now that some dairy prices are turning red. The largest price drop is for whole milk powder: -2,1% to $4,4596 per tonne. The price of butter also clearly takes a step back and falls by 1,8% to $6,958. The average price decreases by -0,9% to $5,039. The traded volume drops to 23.000 tons, which is historically average. The relatively limited percentage decline in the average price reveals that there are also increases. For example, the price of skimmed milk powder increased by 1,6% to $4,545, setting a new record. Cheddar increases by 0,3 to $6,412 per tonne, which is also a all time high is.
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Nevertheless, based on the results we can conclude that the trend-setting dairy auction in New Zealand is taking a back seat. In itself this is not surprising after the extreme price rally that was visible in the previous period. The correction was already expected by some market parties in mid-February, but has not materialized so far.
Until today, the European dairy market was described as fixed, with the prices of cheese, powder and butter rising rapidly. It is possible that the slight decline in the GDT will cool down the overheated market sentiment here, but that does not necessarily have to be the case. Due to the tight milk supply worldwide and the equally tight stocks, a major correction is not likely in any case. Especially since the demand for dairy products worldwide is described as good. The high prices have not yet caused a drop in demand, insiders indicate.