GDT Event 331 Concludes With the GDT Price Index Up 2.5%
So, although the GDT auction price increase may give bullish sentiments an oomph, the fundamentals, continue to be on the other side of the spectrum. The view is that cooperatives, if not already done, will rather revise downwards farm-gate milk prices.
International milk prices and volumes rose for the second consecutive time on Tuesday, the first time this has happened this year. The overall index rose from the previous auction by 2.5% to $3506/mt, following a 3.2% rise in the previous event. At Tuesday's event, 153 participants put in bids, with 103 coming out as winners.
The sellers’ offer quantity came to 25,265 while the minimum supply was 21,650, all being traded in two minutes 39 seconds in 19 bidding rounds. All products offered saw strong gains except anhydrous milk fat which fell by 2.4% with an average price of $4832. Whole milk powder made the strongest gain, up 4.5% with an average price of $3230, followed by cheddar which went up 4.5% with an average selling price of $4561.
Butter edged up by 2.4% with an average price of $4947, while skim milk powder also saw a 1.5% rise with a selling price of $2787. Butter milk powder completed the offered products pack with a 0.8% rise from the previous event with an average price of $2468. Lactose and sweet whey powder were the two products not on offer on Tuesday.
Looking at the trend of the index calculated from the total quantity sold in a trading event across all products, contract periods and sellers, prices are currently at the low levels seen towards the end of 2020. Although the increase in the global dairy trade auction will seem to be good news for dairy farmers in New Zealand, it's not enough now to aver that it's the point that indicates a changeover to increased farm-gate prices.
New Zealand Milk milk production is still showing strong gains. Collections in February came in at 1.81 million mt, up 2% on the same month in 2022. With only 3 months to the end of the season, total collections stand at 16.98, and only 4.41 million mt are needed to match the 21.39 million mt produced in the previous season. That goes to say, so far, the total collection is 263 thousand up on the season. Grass growth is also reportedly positive and expected to remain so till the end of the season.
Another factor helping to keep farm-gate prices down is Chinese demand which has been lacking for the last few months. Production of dairy commodity products in China has remained robust helping to keep their stock levels high. So, although the GDT auction price increase may give bullish sentiments an oomph, the fundamentals, continue to be on the other side of the spectrum. The view is that cooperatives, if not already done, will rather revise downwards farm-gate milk prices.