Supply beginning to tighten on a number of commodities.
Too soon to celebrate after the season dairy has had, analysts caution.
Latest GDT prices offer first relief in months, but broader recovery not expected ‘for some time’.
China not the key driver as buyers from southeast Asia/Oceania step up.
Whole milk powder and skim milk powder volumes shifted from core event to GDT pulse auctions.
Flurry of downward revisions as Chinese interest takes a while to revive.
Constant big buyers for the commodity were nonexistent at this auction, with volumes being split between southeast Asia and north Asia only, pulling demand significantly lower.
The reason may be an overhang of dairy products in Chinese storage, but analysts had expected clearer signs of a lift at this stage of the season.
From a regional buying perspective, China has again dominated the auction but this had no influence on overall demand.
Recovery from the Chinese covid lockdown centres on butter and cheddar were notable as consumers return to restaurants, cafes and bakeries where these products are key inputs.
The latest GDT was a lack-lustre affair, with very little movement in prices compared with the previous auction.
Bidding round information showed more demand arrived for WMP compared to the last event.
Winning prices decreased across all contracts on offer.
Over the last three weeks, the SGX-NZX Dairy Derivatives market has pushed upwards.
Australia’s June milk production declined a whopping 9.2%.
The key takeaway here is that demand does still exist, but buying habits are different currently.
But sharper cheddar price whets appetite for turnaround in demand.
With current exchange rates, inflation impacts, shipping costs and other inputs, the easing in dairy prices will be welcomed as current uncertainty makes long-term views harder to shape.
NZX analyst Alexandria Winning-Browne takes a look at the week that was in dairy.