In this week’s Global Dairy Trade (GDT) event, the market saw substantial price decreases across nearly all dairy products, reflecting increased seasonal availability expected over the coming months.

The overall GDT price index fell by 6.9%, marking a notable retreat across all product specifications and contract periods. This decline aptly reflects the growing seasonal availability of dairy products anticipated in the near future. The worst-hit segments were the cream products, with Anhydrous Milk Fat (AMF) and butter plummeting by 10.7% and 10.2%, respectively. Cheddar cheese also faced a significant drop of 6.9%, while milk powders struggled, with Skim Milk Powder (SMP) down 6.1% and Whole Milk Powder (WMP) falling 4.3%.

Product Performance

  • Anhydrous Milk Fat (AMF): The C2 contract closed at $6750, an 11.4% decrease from the prior auction. Despite a slight premium for C1 ($7275), the forward curve exhibited a significant downward trend, with C6 trading at a 6.4% discount to C2.
  • Butter: Unsalted butter followed a similar pattern, with the C2 contract falling to $6870, down 11.4%. The forward curve showed a consistent backwardation, with C6 trading at a notable discount to C2.
  • Cheddar: Offered for the first time since May 21st, Cheddar C2 ended at $4190, a 3.5% decrease. The forward curve indicated a weaker market sentiment, with a 7% inverse carry from C2 through C6.
  • Skim Milk Powder (SMP): The C2 contract finished at $2590, a 3% decrease from last week’s Pulse auction. The forward curve’s decline in prices was the main driver of the headline negative movement.
  • Whole Milk Powder (WMP): The WMP Regular result saw a significant step down, with C2 closing at $3200, 5.8% lower than C1. The forward curve’s backwardation indicates buyer reticence to commit to future pricing.

Market Drivers
The recent declines are attributed to the increased volumes being offered from New Zealand as the new milk season begins. This influx of supply is expected to exert further downward pressure on prices in upcoming GDT events.

Future Outlook
Looking ahead, the market dynamics suggest a continued price weakness for New Zealand dairy products, particularly SMP and WMP, due to the anticipated rise in supply. In contrast, the European market is expected to remain relatively stable, with little change anticipated during the summer months. The US market, however, presents more uncertainty. Seasonal production decreases coupled with rising holiday demand could significantly influence price movements.

All in all, this week’s GDT event highlights the volatility and sensitivity of the global dairy market to supply changes. Stakeholders should monitor the upcoming auctions closely as the market adjusts to the increased seasonal availability from key producing regions like New Zealand. The potential for further price adjustments remains high, particularly as we move deeper into the new milk season.

Stay tuned to our next coverage of the GDT events on the Vesper platform for detailed insights and further updates.