Poor Demand Pushes Global Prices Lower
Auction 224 of the Global Dairy Trade (GDT) auction finished down 3.5% on Tuesday, with decreases in nearly all product categories. Cheddar and lactose were the only positive movers, improving 0.2% to $1.47 ½ and 1.1% to 41 ¾ cents per pound, respectively.
The biggest price drop belonged to butter, and prices fell 9.6% to just under $1.65 per pound. Anhydrous milk fat dropped nearly as far, closing down 9.4% at 41 cents per pound. In the powder markets, skim milk powder dropped 1.6% to finish at 89 cents per pound, and whole milk powder dropped 1.8% to $1.17 per pound.
It was anticipated that a more robust futures market would push the GDT higher this week, but that didn’t happen. Analysts point to lackluster demand as a reason for the continued drop in global milk prices, coupled with anticipated 3 to 5% higher production in New Zealand.
“If there was any demand out there, it would push GDT prices higher despite decent milk production growth in New Zealand,” says Nate Donnay, director of dairy market insight at INTL FCStone. “But right now it still feels like the demand side is sitting on the sidelines.”
The U.S. market continues to trade higher than global prices. On Monday butter was trading at $2.33 per pound, while grade A nonfat dry milk and dried whey were priced at 88 ½ cents and 43 cents per pound, respectively. Cheddar blocks finished at $1.41 per pound, and barrels ended at $1.29 ¾ per pound.