Global Dairy Trade Price Index Rises 0.3%; Most Product Prices Increase

The price index on this week’s semi-monthly Global Dairy Trade dairy commodity auction increased 0.3 percent from the previous auction, held three weeks ago.

In this week’s GDT auction, which featured 169 participating bidders and 99 winning bidders, prices were higher for Cheddar cheese, skim milk powder, butter, anhydrous milkfat and buttermilk powder; unchanged for whole milk powder; and lower for lactose. An average price wasn’t available for sweet whey powder
.

Results from this week’s GDT auction, with comparisons to the auction held three weeks ago, were as follows:

Cheddar: The average winning price was $4,393 per metric ton ($1.99 per pound), up 2.2 percent. Average winning prices were: Contract 5 (September), $4,444 per ton; and Contract 6 (October), $4,345 per ton, up 2.2 percent.

Skim milk powder: The average winning price was $3,367 per ton ($1.53 per pound), up 0.6 percent. Average winning prices were: Contract 1 (May), $3,415 per ton, up 0.1 percent; Contract 2 (June), $3,352 per ton, up 0.4 percent; Contract 3 (July), $3,363 per ton, up 0.2 percent; Contract 4 (August), $3,392 per ton, up 1.9 percent; Contract 5, $3,415 per ton, up 2.2 percent; and Contract 6, $3,330 per ton, down 1 percent.

Whole milk powder: The average winning price was $4,085 per ton ($1.85 per pound), unchanged. Average winning prices were: Contract 1, $4,088 per ton, up 0.2 percent; Contract 2, $4,077 per ton, unchanged; Contract 3, $4,074 per tn, down 0.2 percent; Contract 4, $4,225 per ton, up 1.9 percent; Contract 5, $4,125 per ton, down 2 percent; and Contract 6, $4,067 per ton, down 0.7 percent.

Butter: The average winning price was $5,776 per ton ($2.62 per pound), up 2 percent. Average winning prices were: Contract 1, $5,763 per ton, down 0.2 percent; Contract 2, $5,777 per ton, up 1.7 percent; Contract 3, $5,815 per ton, up 3.5 percent; Contract 4, $5,760 per ton, up 1.3 percent; Contract 5, $5,745 per ton, up 2.9 percent; and Contract 6, $5,755 per ton, up 5.6 percent.

Anhydrous milkfat: The average winning price was $6,209 per ton ($2.82 per pound), up 0.8 percent. Average winning prices were: Contract 1, $6,360 per ton, down 0.7 percent; Contract 2, $6,198 per ton, down 0.1 percent; Contract 3, $6,206 per ton, up 1.4 percent; Contract 4, $6,206 per ton, up 1.6 percent; Contract 5, $6,175 per ton, up 1.8 percent; and Contract 6, $6,190 per ton, up 1.5 percent.

Lactose: The average winning price was $1,307 per ton (59.3 cents per pound), down 6.5 percent. That was for Contract 2.

Buttermilk powder: The average winning price was $3,710 per ton ($1.68 per pound), up 17.6 percent. Average winning prices were: Contract 1, $4,170 per ton, up 20 percent; Contract 2, $3,507 per ton, up 14.8 percent; Contract 3, $3,980 per ton, up 20.8 percent; Contract 4, $4,050 per ton, up 23.1 percent; and Contract 5, $4,105 per ton, up 24.2 percent.

ASB Bank noted that, given the “lofty highs” prices have already reached on the GDT auction, this week’s price index increase of 0.3 percent was another strong result. With the longer-dated contracts (covering the third quarter of 2021) still trading at high levels, it’s a sign that prices have a bit of momentum into the next season.

Recent price gains have been led by strong demand from China, but this GDT auction saw other regions return to the party, ASB Bank noted. With stockpiles not keeping up with rising consumption, and shipping fears continuing to weigh, the North Asia region (a proxy for China) has dominated recent auctions, driving April’s price gains.

This week’s GDT auction saw Chinese buyers “take their foot off the accelerator,” ASB Bank said, but other regions, particularly South East Asia and Oceania, stepped into the breach, keeping
prices supported.

The GDT auction suggests aggressive Chinese purchasing is likely to ease further, at least in the near term, ASB Bank said. As NZX Dairy noted, the volume of whole milk powder on offer in Contract 2 (i.e., for June shipment) wasn’t fully committed to, suggesting short-term demand may have already been met.

With the contract curve relatively flat and buyers from other regions re-entering the market, the odds are against a sharp correction, but ASB Bank sees prices easing further over the next auctions.

Still, strong post-pandemic global dairy product demand and softer Northern Hemisphere production should keep prices from falling too far, ASB Bank emphasized
.

EDITORIAL COMMENT: Trade Barriers Aren’t Going Away Anytime Soon, by Dick Groves

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