Analysis dairy business
Dairy auction Global Dairy Trade in the red
At the Global Dairy Trade (GDT) that took place today (Tuesday 5 July), the dairy commodities had to let go quite a bit. Especially butter is cut and shaved. It is the sixth price drop in the last seven auction days of the New Zealand internet auction, which serves as a gauge for the mood in the global dairy market.
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The GDT Price Index, the index that combines the prices of all dairy products, fell by 4,1% on this auction day. The value of butter fell almost 10% to $5.648 per tonne. This is the lowest level since January. There was also a major correction in May, but then the butter price recovered again. Whether the decline will also weaken sentiment on the European butter market remains to be seen in the coming days. The sharp decline is of course not a good harbinger. Milk powder prices are also dropping. Skimmed milk powder is down about 5% and can hold just above the $4.000 per tonne mark. Whole milk powder drops slightly below that psychological limit with a price drop of 3,3%.
Cheddar corrects upwards
Cheddar does record a small increase, rising 1,4% to $4,908 per tonne. It should be noted that cheddar fell sharply during the previous auction in mid-June, so this plus can be seen as a small upward correction. The sharply lower GDT quotations reflect weak demand for dairy. The European market has also been struggling with this in recent weeks, but so far this has led to limited price corrections. It is still difficult to estimate whether the mood on the European market will deteriorate further in the coming days. Lower demand is offset by persistently tight inventories, which means the market could take a beating.