Analysis Global Dairy Trade
Dairy prices on Global Dairy Trade are cooling off hard
On this sweltering day there is still something that cools down. And those are the dairy prices on the Global Dairy Trade (GDT). This time, skimmed milk powder in particular gets a hit. The result will not do any good for sentiment on the European dairy market, which has been weak anyway in recent weeks.
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For the third auction in a row, the GDT shows a large price drop. The price index has now fallen to 1.233 points. This is the lowest level since September last year. This means that the price rally that was visible in recent months is no longer reflected in the index.
Milk powder down
The milk powders suffer the greatest damage. Skimmed milk powder recorded a decline of 8,6% to $3.709 per tonne. Whole milk powder recorded a minus of 5,1% to $3.757 per tonne. This decline shows that there is little (Chinese) purchasing interest. The market has been 'complaining' about this for weeks. The decline in the GDT has further deteriorated the competitive position of European milk powder exporters. This leaves milk powder prices in Europe with only one direction and that is downwards.
European butter severely overpriced
This also applies to the price of butter. The GDT quotation falls by 2,1% to $5.530 per tonne. This is the lowest level since mid-November. European product is now almost $1.500 more expensive (expressed in dollars), despite the extremely weak euro, which has recovered somewhat in recent days. It is inevitable that this will put pressure on the European fat market. On the one hand due to a drop in demand on the world market, and on the other hand due to the influx of cheaper product from New Zealand. A fortunate coincidence is that there is little product coming here today, as milk production there is in its seasonal low.
Cheese market down
The cheese market is also receiving negative news: the cheddar price on the GDT drops by 2% to $4.825 per tonne. Here too, the European product is not competitive on the world market. The mitigating circumstances are that European dairy stocks are low and therefore the sales opportunities within the euro zone are good. This makes the European market less susceptible to price differences with other exporting continents. However, the GDT result will not do any good to sentiment on the European dairy market and the downward trend is likely to continue.