Thursday, December 7, 2023

Dairy prices ease at GDT

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Dairy commodity prices eased 0.7% at last night’s Global Dairy Trade (GDT) event, with results mixed across the products.
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Whole milk powder prices were up 0.6% overall. 

Regular grade WMP to ship in September lifted 1.1%. This was a greater decline than the NZX Dairy Derivatives market had anticipated ahead of the event. 

Prices fell 4.6% for product for next month shipping (i.e. shipping in August), indicating that buyers have filled their urgent needs for WMP, NZX analyst Amy Castleton said in a note. 

“Buying from North Asia was up against the July 7 event, and up slightly against the equivalent event last year. 

“There was also a slight increase in volume purchased by Africa but the Middle East bought less and both South/Central America and South East Asia/Oceania bought considerably less WMP than they had at the July 7 event, suggesting that they have filled their needs for now.”

Skim milk powder (SMP) eased 0.5%. Medium heat SMP to ship in September fell 2.8%, a slightly greater decline than the Derivatives market had anticipated ahead of the event. 

Results were mixed by contract period – C2, product to ship in September, was down the most (-2.2%), while C4, product to ship in November, was up the most (+1.2%). 

“South East Asia/Oceania bought nearly double the SMP the region had at the July 7 GDT event, but volume was down against the equivalent event last year,” Castleton said.

“North Asia buying was down against the last event but up against the equivalent event last year. 

“Overall there was a little less SMP sold than at the July 7 event. Fresh SMP still seems to be a little short globally, particularly from Oceania given the time of our season, but there is older product available.”

Butter prices dropped 4.9%, losing all of the gains this commodity made at the July 7 GDT event. 

Anhydrous milkfat (AMF) fell 2.8%. 

“Fats are expected to continue to have a rocky road ahead. Some regions, particularly the US, have seen food service need to shut again or limit their operations – meaning they will need less AMF and butter again,” Castleton noted.

Cheddar prices gained 0.6% at this GDT event, while lactose lost 2.5%. 

The fall in lactose places the average price (US$1279/t) back where it was at the beginning of June. 

“Lactose prices had lifted over US$500/t between January and May, but they now seem to be hovering around US$1300/t,” she said. 

“Demand for lactose has been solid throughout the pandemic but US$1300/t seems to be the barrier where buyers are not willing to pay more for the product.”

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