The Global Dairy Trade (GDT) Index reached its highest point since July 2022 during last night’s auction, rising by 1.9% to an average price of US$4089 (NZ$6930) per metric tonne. This follows a significant 4.8% increase observed at the previous auction two weeks ago, prompting Fonterra to revise its forecast payout to a range between $9 and $10 per kilogram of milk solid (kgMS), with a midpoint of $9.50/kgMS—20 cents above the record price set in the 2021/22 season.
Fluctuations in dairy product prices were observed during Wednesday’s Global Dairy Trade (GDT) auction. Whole milk powder (WMP), which plays a crucial role in determining farmgate prices and constitutes half of the auction volume, saw a 3.2% increase, bringing its price to US$3826 per metric tonne (MT).
Skim milk powder (SMP), the second most influential product at the auction, experienced a smaller uptick of 0.9%, reaching US$2882/MT.
Meanwhile, cheddar cheese prices fell by 3.1%, now priced at US$4834/MT. Mozzarella dropped at 6.6%, settling at US$4315/MT.
Butter rose by 0.5% to US$7008/MT, and anhydrous milk fat increased by 1%.
Both buttermilk powder and lactose were not offered at this auction.
Overall, a total of 36,244 MT of dairy products was sold, with participation from more than 160 bidders.
According to experts, the surge in demand for whole milk powder (WMP) and skim milk powder (SMP) was driven by declining inventory levels in China. Reports show that WMP and SMP stocks in China have plummeted by 88% and 91% year-on-year as of September, respectively. This sharp decline in inventory is attributed to decreasing domestic milk production, which is currently at its lowest levels since 2013, as producers attempt to manage unsustainable raw milk prices.
NZX dairy analyst Rosalind Crickett noted that the anticipated October milk production figures from New Zealand, traditionally a peak month, are expected to show a 2.6% year-on-year growth in milk solids. However, she cautioned that the global outlook for dairy production remains constrained. The resurgence of bird flu in the United States during October and the ongoing challenges posed by the bluetongue virus in Europe are contributing to supply uncertainties. In response to these health concerns, several European countries have mandated vaccinations for livestock.
As New Zealand’s dairy industry prepares for the release of its October production data, stakeholders are closely monitoring both local and international developments that could impact supply and pricing dynamics. The combination of strong demand from key markets and potential production challenges could shape the future landscape of the dairy sector as it deals with these complex factors.