Milk powder prices fell at the Global Dairy Trade (GDT) auction by more than expected on stronger supplies. Tuesday’s weighted average did a repeat of the last event, dropping 5.0%, the fourth decline in a row.
The whole milk powder index fell 6.1pc and the skim milk powder index was down 5.3pc. Anhydrous milk fat prices were down by 1.4pc, but butter prices were down by 6.1pc at this auction.
Prices have now declined significantly since the peak back in the March/April period, with whole milk powder (WMP) prices down over 20pc in US Dollar terms.
StoneX Dairy Group says the GDT 80% butterfat butter price equates to $2.2987 per pound U.S., down 14.8 cents from the last event, and compares to CME butter, which closed Tuesday at a pricy $3.0325.
In a note on the auction, New Zealand bank ASB said the GDT WMP price has fallen from a peak of $4,757 to $3,544 in the latest event – a 22pc decline.
“In earlier reports we have emphasised that we are in the middle of (southern hemisphere) winter and have not panicked about the recent run of soft prices.
“Prices eased over winter last season as well and then moved higher given the extremely tight global milk supply. And we continue to think global dairy demand is likely to remain relatively inelastic, and keep prices well supported,” it said.
ASB also highlighted that it believes global dairy supply will remain ‘extremely’ constrained.
Nonetheless, it said there were no signs of supply concern at the latest auction and in the longer dated contract prices for powders – prices were down for all contract periods for both whole and skim milk powders.
“We continue to see future supply and demand dynamics supporting higher dairy prices, but clearly buyers were not willing to pay up to secure product over the key months of the NZ season at this latest auction,” it said.