By Alexandria Winning-Browne, NZX dairy analyst
Global Dairy Trade (GDT) 321 resulted in another lift for the GDT price index of 0.6% from the previous event, with an average price achieved of US$3610/t. This result was relatively surprising, with derivative market expectations and auction results more closely aligned than expected, even if the results still undershot market expectations. North Asian and SouthEast Asia/Oceania (SEAO) buyers arrived with a desire to secure product, with both regions buying decent volumes. This steady demand helped to push prices just into positive territory across the board. Interestingly, this auction doesn’t seem to be direction setting; something the market is in desperate need of currently.
Milk powders
Milk powders had a mildly positive auction, with increases for both whole milk powder (WMP) and skim milk powder (SMP). WMP increased 0.1% to an average of US$3340/t, albeit a lift of only US$3, and still lower than prices achieved in October. Bidding round information showed demand was similar for WMP compared to the last event. This auction’s supply demand ratio started at 2.5, taking eight rounds to drop below 1.25. C2 regular WMP undershot derivative market expectations, falling US$20/t short at this point in the month.
SMP prices increased 1.7% to an average of US$3102, with prices increasing in all contracts on offer. The premium for NZ medium heat C2 SMP against EU SMP in the same grade has increased from US$189/t to US$223/t. North American SMP set prices in contracts two through four, however, no volumes were sold. C2 MH SMP settled at US$3135/t, overshooting derivative market expectations slightly.
Cream group
Milk fats experienced a varied result in this auction, with anhydrous milk fat (AMF) prices increasing while butter prices declined. This auction now puts AMF values at a premium to butter’s. AMF has an average milk fat value premium of US$87/t. The AMF price index increased another 2.7% to finish the auction at an average US$5797/t. AMF was offered across all six contracts, with all contract periods increasing. Butter on the other hand, declined 1.9% to an average winning price of US$4725/t. Despite butter price declines, bidding round information showed increased demand compared to the previous auction with the demand supply ratio remaining hitting 2.0 for three rounds at the start of the auction
Cheddar
Cheddar prices increased 1.8% at this auction, continuing in range bound trading, at the US$4,800/t mark; finishing at US$4826/t. Strong demand arrived at the start of the auction, kicking off at 2.5 demand/supply.
From a regional buying perspective, China and SouthEast Asia continue to dominate. China took over the top buyers spot for WMP, while continuing to control SMP, butter, and cheddar purchases. SouthEast Asia fell slightly behind China in WMP purchases, while maintaining dominance of AMF purchases. The Middle East also continues to ramp up purchases, securing more WMP at this event compared to the last, the only market to do so. South/Central America also ramped up their AMF purchases, closely following SouthEast Asia.
