Archive: Low volumes support GDT price recovery

Published 18 February 15

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The latest Global Dairy Trade (GDT) auction increased for the fifth consecutive time, increasing 10.1% to a weighted average of $3,366/tonne. Only 23,485 tonnes of product were offered at this auction, around 30% lower than previous February volumes, which is likely to be a key reason why prices have increased so much.

Recent reports have suggested that the global milk supply situation may have tightened over the past few weeks due to ongoing dry conditions in Oceania as well as some European countries limiting production in an attempt to avoid a heavy superlevy. This situation is likely to be contributing to the relatively low volume of product being offered at the GDT auction and may also be encouraging buyers to re-enter the market in order to secure supplies.

What happens to milk supplies over the coming months will be important to whether these positive movements signal the start of a recovery in global prices. Milk supplies in Europe are heading towards their seasonal peak. This, together with the removal of quota restrictions on 1 April, could increase global milk supplies in the short-term which may postpone a recovery until later in the year.  As ever, the weather will play an important role in the balance between supply and demand.