GDT drops as markets remain unsettled

Published 18 March 15

The average weighted price fell 8.8% at the latest Global Dairy Trade (GDT) auction on 17 March, ending its run of six consecutive increases. The price fall suggests the rise in demand seen in February may have tailed off.

Buyers’ concerns about product availability over the next few months have reportedly eased. This could be partly related to Fonterra raising the amount of product forecast to be sold at this auction, as well as over the next twelve months.

The approaching spring flush in the EU, combined with the removal of quotas, may also be easing concern over future supplies. Production levels are hard to predict because low farmgate prices are expected to continue to squeeze margins and potentially hamper growth.

As a result, the market seems unsettled and it appears buyers are waiting for a clearer indication on price direction before committing to longer term deals.

GDT graph 18Mar15