Global Dairy Trade (GDT) Prices Rise 4.5%

The Global Dairy Trade (GDT), an indicator of international dairy market sentiment, climbed 4.5% to its highest level since July 2014 at today’s auction (15 November).

Dairy product prices rose at the Global Dairy Trade auction, gaining for the seventh time in eight auctions, amid supply decreases.

The GDT price index increased 4.5 percent to US$3,519, up from US$3,327 at the previous auction two weeks ago. Some 23,902 tonnes of product was sold, down from 27,735 tonnes at the previous auction.

All commodities saw a price rise, led by butter milk powder, up 13.3 per cent to $2623.

Speaking to Agriland this week, Senior Analyst at AHDB, Luke Crossman said that international pressure on dairy markets remains relatively strong.

“We have seen EU markets level off since the end of October, but that may just be a blip. Global milk output continues to fall.”

The Global Dairy Trade is the main global indicator of market sentiment at this time of the year, Crossman said.

"Tightening milk supplies in both New Zealand and Australia has put pressure on suppliers with some dairy companies struggling to meet contracted delivery times," AgriHQ dairy analyst Susan Kilsby said in a note. "This has left a few buyers with low supplies on hand putting some urgency into the market."

Kevin Bellamy of Rabobank said dairy-product prices are likely to stabilise at current levels rather than continue to harden and while he said production was unlikely to grow substantially through 2017, he pointed out that demand on world markets remained weak.

A sustained growth in dairy commodity prices would require greater activity from both Chinese and Middle Eastern buyers, and there was no evidence of this happening, he said.

On a more positive note for Irish farmers, he predicted that global supplies would remain tight into 2017 and Ireland would be well placed to capitalise on this.

He said the reaction of French and German farmers to expansion opportunities had been "timid", while further Dutch production growth would be curtailed by "environmental considerations".

At the latest GDT auction, butter milk powder jumped 13.3 percent to US$2,623 a tonne, while cheddar climbed 11 percent to US$3,697 a tonne.

Skimmed milk powder rallied 9.8 percent to US$2,562 a tonne, while lactose advanced 4.6 percent to US$787 a tonne. Anhydrous milk fat rose 4.4 percent to US$5,348 a tonne, while butter added 1.1 percent to US$4,193 a tonne, and rennet casein edged 0.6 percent higher to US$6,040 a tonne.