Tight supply sees global dairy commodity prices lift

Demand firmed for milk powder, milkfats and cheese.
Demand firmed for milk powder, milkfats and cheese. Photo credit: Getty

Global dairy commodity prices have lifted in the latest Global Dairy Trade (GDT) auction, as global milk supplies tighten.

Average prices at the latest event were US$3,412t, with the GDT price index up 2.7 percent, following four consecutive decreases.

NZX dairy analyst, Robert Gibson, said the result was likely linked to tighter global milk supplies with demand at this event firming for milk powder, milkfats and cheese.

"Milk powder prices strengthened in response to stronger demand from south east Asian countries, and Middle East with whole milk powder (WMP) prices lifting 3.6 percent to an average price of US$3074/t," he said.

This was the first lift in average prices for WMP since March. 

Price levels lifted across all delivery dates out to December, with stronger increases for November (+4.0 percent) and December (+4.1 percent) delivery dates.

Skim milk powder (SMP) prices lifted 3.8 percent with average prices reaching US$2505/t. 

Strong demand led to a 6.4 percent lift in September prices, with all remaining delivery dates lifting by more than 2.0 percent. 

"This is the second consecutive lift in price levels for SMP, with prices since the beginning of 2019 largely sitting in the range of US$2400-2500/t."

Milkfat prices also lifted, with the anhydrous milk fat (AMF) price index up 1.7 percent to an average price of US$5523/t. 

"Price increases occurred for all delivery dates except August, which decreased 1.9 percent, suggesting that the market had adequate cover for near term deliveries."

He said butter prices also lifted 1.7 percent with an average price of US$4406/t, which was likely in response to reduced volumes sold compared with the previous event. 

"This follows five consecutive decreases in the average price of butter at GDT, with strong price increases occurring for near term delivery dates."