GDT ends year on a decline

Published 20 December 17

The last Global Dairy Trade (GDT) event of 2017, on 19 December, resulted in a 3.9% decline in the price index from the previous event. The average weighted price of all products was US$2,969/tonne, almost 20% below the year-ago average price of US$3,656/tonne.

Performance across the last year has been split between fats and powders. Butter and AMF prices rose substantially in the first half of the year, in line with global fat shortage, but have been declining since around September. The latest butter average price is only 4% above a year ago, but AMF remains 19% higher than last year. Cheddar followed a similar pattern, but with a lower rise and with the latest average price now 11% below a year ago.

Powders, on the other hand, spent most of the year in decline. The latest average weighted price for WMP is down 23% on a year ago, with the SMP average price down 36%. Together powders make up roughly three quarters of product sold, so this has weighed on the all-product prices and been the main driver behind the general downward trend over 2017.

Prices in the new year might be influenced by how New Zealand is affected by its season of mixed weather. NZ monthly production is currently ahead of last year, with November production up 4.2% on the year. However, a slow start to the season means that Fonterra, the dominant milk buyer, is currently forecasting no change in production between 2016/17 and 2017/18.