Dairy Products Prices Fall in the First GDT Auction of 2023

Cow Milk Butter

Anhydrous Milk Fat (Butter oil)

Published Jan 4, 2023

The first Global Dairy Trade (GDT) auction in 2023 ended on Tuesday 23rd January with prices of all products on offer edging down. For the second consecutive drop, overall prices fell by an average of 2.8 per cent from the last auction in December where it fell 3.8 per cent. There were 33,778 mt of quantity sold across all product classes with 132 participating bidders and 114 winning bidders.

The first Global Dairy Trade (GDT) auction in 2023 ended on Tuesday 3rd January with prices of all products on offer edging down. For the second consecutive drop, overall prices fell by an average of 2.8 per cent from the last auction in December where it fell 3.8 per cent. There were 33,778 mt of quantity sold across all product classes with 132 participating bidders and 114 winning bidders.

The volume at this trade fell with the weighted average selling price coming in at $3365/mt. Butter milk powder was the biggest loser falling 12.9 per cent to $2556. Anhydrous milk fat fell 5.1 per cent to $5395 while skim milk powder fell 4.3 per cent to $2838. Lactose also followed coming down by 3.6 per cent to $1178. Butter and Cheddar were neck in neck falling by 2.8% and 2.7 per cent respectively: butter ended at $4479 while Cheddar came in at $4690. Whole milk powder finished the pack at $3208 down 1.4 per cent. Sweet whey powder on the other hand was not offered at this event.

With the decline in prices at the just-ended auction on the backdrop of rising production costs and the general inflationary pressures facing farmers, there is a concern within the dairy industry about how farmers are going to react to this news in terms of production. It is fair to assert that, farmers would be unhappy with the direction of trade. Farms in New Zealand and Australia are reportedly in short supply of farmhands which may also dampen gains made earlier on in the current season.

There is also the issue of geopolitical happenings and a subdued demand coming from China. China, a big buyer of New Zealand dairy products has held the brakes on its dairy demand recently on the back of domestic food security policies and the recent covid-related lockdowns. Adding to these is the volatility within the global market which is pushing the general demand for dairy products down. Even more concerning is the rising interest rates in New Zealand which according to reports is putting a lot of financial stress on farmers, more so affecting the mental health of some farmers.

The First GDT auction of 2023 seems to have given a direction of where dairy commodity prices would behave but for farmers, there are so many decisions to be made to remain profitable.