International Milk Prices and Volumes Fell for the Second Time in March at the Global Dairy Trade (GDT) Auction

Anhydrous Milk Fat (Butter oil)

Lactose

Published Mar 22, 2023

The March 21st edition of the Global Dairy Trade Auction ended with a fall across the board in dairy product prices. The GDT price index fell for the second time this month, down 2.6% with an average selling price of $3361 per mt. At event 328, three products, buttermilk powder, lactose and sweet whey powder were not offered but all others sold saw big losses. Market undertones remain unsettled, but increased milk collection numbers going into the spring flush in Europe, could add bearish sentiments. Much will now depend on demand from China and Chinese domestic policies which should move global dairy commodity prices. Demand for dairy products from the food services industry should also help move prices into the spring flush.

The March 21st edition of the Global Dairy Trade Auction ended with a fall across the board in dairy product prices. The GDT price index fell for the second time this month, down 2.6% with an average selling price of $3361 per mt. At event 327 two weeks before, the price index had fallen 0.7% with an average selling price of $3403. Event 328 yesterday saw 148 participating bidders with a total quantity of 26,795 mt traded, that number up 0.2% from the previous quantity sold.

At event 328, three products-buttermilk powder, lactose and sweet whey powder were not offered but all others sold saw big losses. Anhydrous milk fat fell 3.8% to sell at $5150 while butter finished 3% down to $4748. The price index for cheddar also fell 10.2% to $4052 while that of skim milk powder also went down 3.5% to $2648. Whole milk powder saw the smallest loss of 1.5% with a final trade price of $3228.

The losses across the board emphasise a somehow dull momentum for dairy commodity prices at least in the first quarter of 2023. The global demand for dairy commodity products has been tracking low while production of powdered milk and butter is active. Buyers in New Zealand are also not buying forward and only buying to cover their short-term needs all adding to the lull buying activity and helping to keep prices down.

The demand from China is also another price-influencing factor keeping the tabs on dairy commodity prices: Chinese demand has not been forthcoming. China’s domestic dairy production went into an overproduction state in January on the back of weak consumer demand. Its demand for New Zealand dairy products which is normally huge has been thus flat to near lower this time around pushing prices of the latter down.

Market undertones remain unsettled, but increased milk collection numbers going into the spring flush in Europe, could add bearish sentiments. In New Zealand, however, robust milk collections are set to slow in line with the seasonal trend, but that alone would not be strong enough to cause prices to recover. Although Australian production has been lackadaisical for some time on poor pasture and adverse weather, its dynamics have not been strong enough to change the direction of international milk prices.

Much will now depend on demand from China and Chinese domestic policies which should move global dairy commodity prices. Demand for dairy products from the food services industry should also help move prices into the spring flush.