The second Global Dairy Trade auction of 2016 has recorded a drop of 1.4% on the last auction held on January 5, 2016.

Skimmed milk powder (SMP) and whole milk powder (WMP) both recorded declines.

Only anhydrous milk fat (AMF) and butter milk powder (BMP) recorded increases at the latest Global Dairy Trade auction.

At the last Global Dairy Trade of 2015, overall dairy product prices were up 1.9%.

Key Results

  • AMF index up 2.4%, average price US$3,724/MT
  • Butter index down 5.9%, average price US$3,162/MT
  • BMP index up 2.1%, average price US$1,620/MT
  • Ched index down 3.4%, average price US$2,867/MT
  • LAC index down 1.7%, average price US$579/MT
  • RenCas index down 7.8%, average price US$4,405/MT
  • SMP index down 3.2%, average price US$1,835/MT
  • WMP index down 0.5%, average price US$2,188/MT

GDT Jan 19

Key Drivers

A recent analysis by AHDB Dairy said that milk production in the main producing regions (EU, New Zealand, Australia, US and Argentina) has grown by around 2% annually over the past five years, which is around 5 billion litres more milk per year.

However, it noted that the disappearance of the Russian market in the summer of 2014, combined with the stock build-up in China reducing its dairy import needs, meant demand was suddenly too low for the rate of growth in milk production.

Milk supplies, however, continued to increase, according to AHDB fuelled primarily by growth in the EU resulting from the removal of quotas in April 2015.

With a large chunk of import demand taken away by China and Russia, the excess milk has ended up as accumulated stocks.

AHDB has said that EU stocks of SMP and cheese are reported to be at their highest levels in at least five years while US commercial stocks of milk powders hit a record high in the summer of 2015.