GDT downward trend continues in latest auction

The latest Global Dairy Trade (GDT) auction – Event 221 – has seen the recent downward trend continue, concluding with the GDT Price Index down 1.9% on the previous sale.

Lasting for two hours and 28 minutes, the auction saw 170 participating bidders do battle across 15 rounds with 143 bidders emerging with winning offers.

A total of 41,981MT of product were sold on the day.

Key results:
  • AMF index down 4.4%, average price US$5,069/MT;
  • Butter index down 5.9%, average price US$4,016/MT;
  • BMP index up 3.6%, average price US$2,522/MT;
  • Ched index down 1.2%, average price US$3,468/MT;
  • LAC index up 0.6%, average price US$913/MT;
  • RenCas index up 3.0%, average price US$5,552/MT;
  • SMP index down 0.3%, average price US$1,982/MT;
  • SWP index not available, average price not available;
  • WMP index down 1.2%, average price US$2,753/MT.

Butter took a heavy knock, falling by 5.9% on the day, while Anhydrous Milk Fat (AMF) also took a hefty hit in index, reducing by 4.4%.

Buttermilk powder (BMP), however, saw a bounce of 3.6%, while Rennet Casein (RenCas) also saw a rise of 3%.

Source: Global Dairy Trade

The price for Sweet Whey Powder (SWP) was once again not available on the day.

‘Massive divergence’ in milk price

There is a “massive divergence” in milk prices that the present Ornua Purchase Price Index (PPI) is generating when compared to past prices paid when the index was at similar levels, according to Ger Quain.

Quain – Dairy Committee chairman of the Irish Creamery Milk Suppliers’ Association (ICMSA) – said that many farmers were highlighting the significant shortfall in the price that they were receiving at present when compared to the prices they had received in the past, when the PPI was the same.

He noted that as recently as last year, when the Ornua PPI was at the same level as this August 2018, a farmer milk price of 33.5c/L was being paid – compared to the average of 32c/L being generated by the present PPI.

He added that the divergence could be explained if there was a dramatically rising or declining market either then or now, but this is not the case given the relative stability in the last 18 months.

“The variation in the PPI from January 2017 to present is only 10 base points or 3c/L.

“Milk processors need to explain why their prices have lagged the PPI since May 2018 – and are still lagging it.”