Sharp drop in milk powder prices at the last GDT auction


Milk powder prices fell more-than-expected at the Global Dairy Trade (GDT) auction on stronger supplies.

The overall GDT price index is down 5 percent, with prices falling across all product sub-indexes.

The whole milk powder index fell 6.1 percent and the skim milk powder index fell 5.3 percent. Anhydrous milkfat prices were down 1.4 percent, but butter prices were down 6.1 percent at this auction.

Prices have declined significantly since peaking in March/April, with whole milk powder (WMP) prices down over 20 percent in US dollar terms.

In a note on the auction, New Zealand bank ASB said the GDT-WMP price fell from a peak of $4,757 to $3,544 in the recent event – a 22 percent drop.

“In previous reports we have emphasized that we are in the middle of winter (Southern Hemisphere) and have not panicked over the recent wave of soft prices.

“Prices also fell over the winter last season and then rose in the face of the extremely tight global milk supply. And we continue to believe that global milk demand is likely to remain relatively inelastic, keeping prices well supported,” it said.

ASB also stressed that it believes global milk supply will remain “extremely” constrained.

Nonetheless, there were no signs of supply concerns at the last auction and longer-term contract prices for powder – prices had fallen for all contract periods for both whole milk powder and skimmed milk powder.

“We continue to see future supply and demand dynamics supporting higher milk prices, but buyers were clearly unwilling to pay to secure product in the key months of the New Zealand season at this recent auction,” it said. Sharp drop in milk powder prices at the last GDT auction

Fry Electronics Team

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