GDT price tumbles as forecast volumes grow

Published 8 March 17

The Global Dairy Trade (GDT) overall Price Index decreased by 6.3% this week, mainly due to falls in milk powder prices. Increased forecast volumes of WMP and SMP being offered at the auction appear to have put downward pressure on prices.

These volume rises are off the back of stronger than anticipated milk production in New Zealand, with Fonterra recently lifting its milk production forecast. It now expects to finish the 2016/17 season with volumes 5% below last year, revised from its previous forecast of 7% below last season.

SMP prices fell particularly sharply, with the Index dropping by 15.5%. An extra factor likely to have contributed to SMP’s abrupt decline is the large premium that GDT prices had recently gained over EU prices. Such large differentials are rarely maintained for long periods and the recent news about New Zealand production appears to have tipped the balance to close the gap. 

SMP prices 8Mar17

*Prices for Mar-17 are for the month to date, based on the GDT Event on 7 March and EU wholesale prices for the week ending 4-Mar