Dairy product prices fell again at the most recent Fonterra Global Dairy Trade auction.

The event represents the fourth negative auction for prices in a row and the GDT index is now 37% lower than this time 12 months ago.

Average prices paid at the auction fell 3.5% on the last event held two weeks previously which itself was down over 3.6%.

Key Results

  • AMF index down 6.3%, average price US$3,505/MT
  • Butter index down 0.8%, average price US$3,005/MT
  • BMP index down 14.0%, average price US$1,748/MT
  • Ched index up 9.1%, average price US$3,012/MT
  • LAC index not available, average price not available
  • RenCas index down 11.0%, average price US$6,094/MT
  • SMP index down 7.5%, average price US$2,048/MT
  • SWP not offered
  • WMP index down 1.8%, average price US$2,386/MT

After the unexpected rebound in dairy product prices from January to March, downward pressure has been perceptible again since March (SMP -9%, WMP -1%, butter and Cheddar -3%).

EU production

According to the Milk Market Observatory EU milk production was down by 1% in the first two months of the year thanks to reduced production, but preliminary information on March production shows divergent trends.

Buyers have adopted a waiting attitude, covering only their immediate needs, in the expectation that milk quota expiry may spark production increases, pushing prices down.

The situation is expected to be clearer once the dairy production peak is passed (mid-May).

The Milk Market Observatory’s latest assessment of EU stock levels based on a residual approach (production + imports – consumption and exports) showed decreasing stocks for butter, SMP and cheese in the last months but the level reached implies different conclusions: while SMP stocks were qualified as excessive for the moment, butter stocks were regarded as only slightly above needs and cheese stocks as normal.

The better performance on the cheese side is due to the quick adjustment of cheese manufacturers to the Russian import ban.