Global Dairy Trade commodity prices climb for second auction running

By Mark ASTLEY contact

- Last updated on GMT

Global Dairy Trade commodity prices climb for second auction running

Related tags: Gdt price index, Milk

Dairy commodity prices rose nearly 11% earlier today on the Fonterra-owned Global Dairy Trade (GDT) auction platform.

The GDT Price Index, which is a weighted average of percentage changes in prices on the auction platform, increased 10.9% at today's bi-monthly auction.

It reported an an average selling price of US$2,226 per tonne of product - up from US$1,974 on August 18. 

Prices for anhydrous milk fat (AMF), butter, butter milk powder (BMP), cheddar, rennet casein, skim milk powder (SMP), and whole milk powder (WMP) increased.

Only the average price of lactose, which is sold exclusively on the GDT platform by Arla Foods Ingredients, decreased. 

Volumes also fell, from 36,904 tonnes at the last auction to 35,865 tonnes today.

GDT Price Index

On August 18, the GDT Price Index rose for the first since March.

At the previous auction, on August 4, the Price Index fell 9.3% - a tenth consecutive fall in the price of dairy commodities traded on the platform.

"Certainly the GDT has claimed back the ground lost over the last couple of months,"​ Kevin Bellamy, senior dairy analyst, Rabobank, told DairyReporter. 

"We think that is possibly due to the market beginning to factor in concerns over New Zealand supply through the next season. There has also been some demand generated by price taking by some buyers at what are still very attractive low prices."

"However, we don't think the market should get too excited over the gains,"​ Bellamy added. 

"Fundamentals,"​ including lower Chinese demand, rising production in the European Union (EU) and US, the Russian ban on Western food imports, "still persist,"​ he said.  

"With any substantial adjustment to supply from New Zealand likely to be in the later half of the season, and potential support packages from the Council meeting in Europe on the 7th helping to maintain European supplies, we are still viewing substantial price rises being delayed until next year."

Reduced volume

Within days of the August 4 auction, it was announced that US dairy giant Land O'Lakes had formally withdrawn from GDT. 

Seven sellers – Amul (India), Arla Foods (Denmark), Arla Foods Ingredients (Denmark), DairyAmerica (USA), Euroserum (France), Fonterra (New Zealand) and Murray Goulburn (Australia) – continue to offer commodity dairy products on the GDT platform. 

Fonterra, which established the GDT platform in 2008, announced days later it was reducing its 12 month GDT volume forecast by 56,045 tonnes.

It announced plans to cut its offering over three months by 63,930 tonnes, but said it would add 6,885 tonnes on later this year “in anticipation of changing market conditions."

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