The overall Price Index at the Global Dairy Trade (GDT) auction climbed 11.4 per cent this week, its largest increase since August, according to UK levy board AHDB Dairy.
This was mostly driven by a 19.8 per cent rise in the Whole Milk Powder (WMP) Price Index, with WMP making up nearly half of the product sold.
Recent reductions in New Zealand milk production forecasts are likely to have helped drive up WMP prices this week. Fonterra has reduced its forecast volume for the 2016/17 season (ending in May 2017), taking it to 6.2 per cent below last season.
Its milk collections for June to September were 2.9 per cent below last season and early October volumes in some regions are significantly down due to wetter than normal spring weather. As a result, Fonterra says it does not expect production volumes to recover for New Zealand’s seasonal peak in October.
Off the back of this, Fonterra has reduced its forecast offer volumes for New Zealand product on GDT over the next twelve months. In addition, volumes at this week’s event were already around 20 per cent lower than this time last year and 40 per cent below the five-year average. Therefore, less product on offer, combined with concern about upcoming volumes appears to have put upward pressure on prices.
Source: The Cattle Site