Surprise uplift in the GDT auction

The fortnightly GDT auction has reported an unexpected uplift, following a run of four periods of decline. Overall the auction of the 18^th April 2023 saw a rise of 3.2% to an index of $3,362.

SMP rose to $2,776, an uplift of +7.0%, cheddar was up by 5.7% to $4,411 and butter rose by +4.9% to $4,821 per tonne.  Whole milk powder was only up by a relatively modest 1.0%, ending at $3,089.

The reported rises come despite the relatively high availability of milk with latest global milk supply figures being reported as up 1% year on year.  Generally there is a converse relationship between global milk supplies and prices on the GDT with prices tending to be more depressed when milk supplies are high, and vice versa.  These results have bucked the trend. However, despite this upwards movement prices are still at a relatively low level for those seen in the heady recent months, edging back towards the sorts of levels observed in the pre-pandemic years between 2016 and 2020.

Powders make up most sales on the platform, with WMP making up about half of volumes sold and SMP just under a quarter. Powder markets are particularly influenced by Chinese buying activity, which has so far been disappointing in recent months, due to high stock levels and continuing impact of Covid policies and inflationary pressures. The outlook for import demand from China remains uncertain.

The global picture for markets is still on the negative side. According to Rabobank, expectations are for demand to continue to weaken as a response to costs, while supply is likely to grow as the impact of higher milk prices comes to fruition. For powders in particular, the reduced global demand combined with the high cost of drying will continue to put an extra squeeze on producers. 

Time will tell whether this positive movement represents a shift in direction or a blip ahead of the Northern hemisphere flush.

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