Global Dairy Trade auction continues climb

The global dairy trade auction, an indicator of market sentiment rose for a fourth consecutive time (2 May), increasing by 3.6%.

The auction saw an average price of US$3,166/t (£2,449/t), with skimmed milk powder (SMP) the only commodity to fall in value.

The rise was largely driven by significant increases in buttermilk powder, which leapt 21.8% to $1,859/t (£1,438/t), whole milk powder (WMP), up 5.2% to $3,233/t (£2,502/t) and cheddar, increasing 4.6% to average $3,666/t (£2,837/t).

See also: First Milk announces May price fall

SMP dropped by 0.9% to average $1,982/t (£1,534/t), falling back from a 7.1% increase a fortnight ago.  

The result comes amid rising global production as the spring flush in Europe gets under way.

The latest EU Commission report shows European production for 2017 will be 0.6% higher than 2016.

It says European production levels will catch up with those of last year by the end of spring, and then overtake volumes seen 12 months ago in the second half of this year.

Analysts speculate that cyclones Debbie and Cook in the Oceanic region will curtail New Zealand milk production, leading up to the start of its new season in June, following rises of 9-10% in March.

The latest auction leaves the GDT index at its highest level in 2017, 10.5% up on the lows of two months ago and back to the relative highs seen at the end of 2016.