Reversal in milk powder price trendsStaff Writer | September 7, 2017
Recent results from Global Dairy Trade (GDT) events show the price index is lagging behind EU wholesale prices for whole- and skimmed milk powders – a reversal of the trend seen at the beginning in the year.
Dairy Strong demand for butter
Back in January 2017, GDT auction prices for WMP and SMP were rising above European levels in U.S. dollar terms on the back of concerns over milk production in New Zealand.
Now, with EU milk production struggling to match demand for dairy products, this trend has reversed.
In the EU, strong demand for butter and a shortage of supplies have been pulling up prices. WMP prices are rising too as it is in competition for the limited supplies of dairy fat.
Although there has been an upturn in Chinese imports of WMP in recent months, the expectation of ample supplies from New Zealand, the top supplier of WMP, has limited upward prices movements at the GDT auction.
SMP prices have been in decline since June, but from that point the GDT price index has fallen more steeply than the EU wholesale price.
At the latest GDT auction, the weighted average SMP price was the equivalent of €1,647/tonne (1,944 USD/tonne), below the EU intervention price of €1,698/tonne.
While oversupply might be affecting markets worldwide, it appears intervention may be providing some protection in EU markets. ■