Dairy prices plunge sharply on Global Dairy Trade

With the auction result, the rally on the dairy market is finally over, the average price index on the GDT drops 8,5%. Butter prices lose 12,5% ​​to $5,807 per tonne. The lowest level since the beginning of this year. Milk powder prices are also falling sharply, with losses of up to 6,5% for both full and skimmed. Product offered from Europe also traded significantly lower. With a decline of 8,6%, cheddar is also not out of the picture. The declines are also much steeper than analysts had expected.

Correction to the rapidly rising prices
The losses are not directly related to growing supply. Although milk production in the Northern Hemisphere is working towards its seasonal peak, the supply is lagging far behind other years. Dairy supplies are scarce and production increases at many factories are desirable to catch up. The decline appears to be a correction to the rapidly rising dairy prices earlier this year. The market rose particularly sharply in March, when the war in Ukraine flared up in full force. In the meantime, the market has calmed down again and doubts are arising.

The doubts concern the ability to bear the historically high prices. Especially now that retailers are showing a lot of resistance. China also imports significantly less milk powder. In March, imports of skimmed milk powder were a quarter lower than last year, and whey powder imports even halved. The lower Chinese import requirement is due to increasing production there. The strict corona measures are also likely to slow down demand.