Global Dairy Trade commodity prices increase fourth auction running

By Mark ASTLEY contact

- Last updated on GMT

Global Dairy Trade commodity prices increase fourth auction running

Related tags: Gdt price index, Milk, Fonterra

Commodity prices on the Global Dairy Trade (GDT) platform rose 9.9% yesterday - the fourth increase in a row. 

The GDT Price Index, a weighted average of percentage changes in dairy commodity prices on the platform, increased 9.9%.

It reported an average selling price of US$2,834 per tonne of product - up from US$2,568 per tonne at the last auction on September 15. 

Volumes declined, however, from 36,050 tonnes on September 15 to 35,243 tonnes. 

Butter milk powder (BMP), skim milk powder (SMP) and whole milk powder (WMP), up 13.8%, 13.4% and 12.9% respectively, were the main drivers of yesterday's increase. 

Anhydrous milk fat (AMF), lactose, rennet casein and cheddar also increased, by 9.9%, 5.9%, 4% and 0.5%. 

Butter, offered by Fonterra and DairyAmerica on the platform, decreased by 2.3%.

GDT INDEX
The GDT Price Index has risen four auctions running.

The GDT Price Index has risen the last four auctions - 9.9% yesterday, 16.5% on September 15, 10.9% on September 1, and 14.8% on August 18. 

On August 4, the Price Index fell 9.3% - a tenth consecutive fall in prices.

Speaking with DairyReporter, Kevin Bellamy, senior dairy analyst, Rabobank, went into the factors behind the up...

"Fonterra were selling pretty cheaply direct to customers to clear stock before their year end in July,"​ said Bellamy. "This has come to an end and as a result of this drying up of cheaper supply, buyers are returning to GDT."

"Having reduced stocks, Fonterra offer volumes are lower."

On August 13, Fonterra reduced its GDT volumes forecast for the next 12 months by 56,045 tonnes.

It said it would cut its offering by 62,930 tonnes over three months, then add 6,885 tonnes on later in the year “in anticipation of changing market conditions.”

In early September, it announced a further reduction of 22,050 - 15,200 over three months and 7,850 later in the year.

“You would expect prices to tighten at this time due to Chinese starting to forward fill volume to reduce tariff quotas in January," ​Bellamy continued.

“The market is becoming more aware of the possibility of reduced New Zealand supplies ​through the season due to low prices.”

US dairy giant Land O’Lakes had formally withdrawn from the GDT platform on August 7.

It joined GDT as a seller in March 2014 offering SMP, but had not offered product for more than six months.

Amul (India), Arla Foods (Denmark), Arla Foods Ingredients (Denmark), DairyAmerica (USA), Euroserum (France), Fonterra (New Zealand) and Murray Goulburn (Australia) currently offer products on the GDT platform.

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