The Ornua Purchase Price Index (PPI) for the month of June is up slightly on the figure for May.

The PPI for last month is 179.4, an increase of just under one point from the May value of 178.5.

This most recent PPI figure reflects a price of 56c/L, inclusive of VAT, based on Ornua’s product purchase mix and assumed member processor costs of 8.3c/L, though excluding member margins.

Ornua noted that the energy cost element of the processing cost is variable and changes each month, depending on energy costs.

The business said that the increase is due to the continued stronger returns across the product range.

The Ornua Value Payment payable to members for June is €10.4 million, which equates to 3.6% of gross purchases in the month (3.7% year to date).

While the increase in the Ornua PPI is good news, it comes the day after the Global Dairy Trade (GDT) index took a bit of a tumble.

The GDT dropped by 4.1% following its latest trading event, which took place yesterday (Tuesday, July 5).

It marks the second consecutive fall in the index.

The GDT, which hit a record high of 1,593 on March 1, now stands at 1,287 after trading event 311 yesterday.

The average price achieved at yesterday’s trading event was $4,360/MT, with 23,461MT of product sold.

There were 147 bidders, 111 of whom were successful, who took part in 17 bidding rounds. The event last for two hours and 19 minutes.

Reacting to the latest GDT figures, market analyst firm StoneX said that the index was much lower than expected. A decrease of only 0.7% would have been expected.

The results should a decline for every product except cheddar. Butter and skim milk powder (SMP) were the primary drivers of the decline in GDT, StoneX noted.

Volume purchased by the north Asia region (which includes China) continues to be lower compared to the same time last year, although purchases grew from the previous event.

Purchases by southeast Asia and Middle East buyers were also higher than levels a year ago.

The estimated farmgate return fell this event by nearly NZ$0.50, to NZ$11.09/kg. Through three events of this season, the season-to-date average price has trickled lower each event, now standing at NZ11.45/kg.

Fonterra increased its forecasted payout in the final week of June to NZ$9.50. GDT average returns this season are still well above Fonterra’s forecasted payout, StoneX said.