After a very long downward trend in the global dairy market, an upward trend was seen from April 2016 to September 2017. In the last few months following September, a downward trend has once again surfaced. The extent to which the prices of the different dairy products in the international market increased differs. The increase in the price of butter from the middle of 2016 to August 2017 was much higher than that of other types of dairy products, while the price of skimmed milk powder, a co-product of the manufacture of butter, remained much lower than that of other dairy products.
It appears that supply of and demand for dairy products in the international markets, with the exception of the supply of and demand for butter and skimmed milk powder, are at present fairly well balanced.
Global Dairy Trade
IFCN Milk Price Statistic
Five year’s butter price development (source GDT)
The surge in dairy fat prices, which has taken butter values to record highs on some markets, could spark a ”fundamental market change” for milk processors, co-operative giant Arla Foods said, forecasting a continued dairy market revival.
Peder Tuborgh, the Arla chief executive, termed the rally in values of milk fats as the ”key driver of positive developments in the global [dairy] market”, which has seen values at GlobalDairyTrade auctions, for instance, rebound by 70% over the past year.
Global Dairy Trade Butter Price
The FAO Dairy Price Index averaged 216.6 points in July, up 7.6 points (3.6 percent) from June and 74.3 points (52.2 percent) above its value in July 2016. Despite this latest increase, the Index is still 21 percent below its peak reached in February 2014.
International prices of butter, cheese and Whole Milk Powder (WMP) increased, but those of Skimmed Milk Powder (SMP) declined. Tighter export availabilities pushed butter prices to a new high in July, widening the spread between butter quotations and other dairy products further. While strong buying activity from Asian importers also underpinned cheese and WMP quotations, SMP prices were weighed down by slack demand and prospects of larger releases from the intervention stocks in the EU.
This GDT figure shows the butter price development during the past 12 months.
International milk prices rallied in the passed Global Dairy Trade auction, adding to the view that the market may be on the road to recovery. The GDT Price Index, which covers a variety of products and contract periods, rose 12.7 percent, with an average selling
price of $2,731 per tonne, in the auction held Tuesday.
Whole milk powder prices, which make up the bulk of the auction, soared 18.9 percent while skim milk powder prices rose 3.0 percent and butter rose 14.1 percent.
For the second time the prices went up at the latest GDT trading event, this time with an average of 3.8 percent. WMP was among the winners with +7.5 percent.
For the first time this year the Global Dairy Trade index went up. The index reached +1.4 percent on 1 March after a four negative price indexes in a row.
Freefalling milk prices seem to have finally found a bottom, as prices on the Global Dairy Trade (GDT) auction site bounce by 15%, following a rally in the dairy futures market.
Tuesday’s GDTevent, which is run by New Zealand milk giant Fonterra, saw prices for whole milk powder rise 19% from the last event two weeks ago, while prices for anhydrous milk fat soared 27%.
This is the first time prices have risen on the GDT since early March, and mark a recover from the previous auction’s 13-year price low.