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Sharp fall in GDT could be post-pandemic correction


A sharp fall in the latest Global Dairy Trade (GDT) price index returns it to values last seen in early May. Analysts believe this could be a post-Covid-19 market correction.


The Tuesday August 4 GDT Auction saw 164 bidders compete for 32,696 tonnes of dairy products, with the average price falling 5.1% to $3,045/tonne since the previous event.


The GDT Price Index has dropped by 50 points to 939, ending a run of successive increases since the low of 893 reached at the May 5th event.


Whole milk powder was the biggest loser in the latest auction with a 7.5% fall to $3,003/tonne; followed by butter milk powder – down 6.5% to $2,259/tonne; Cheddar, losing 5.3% to $3,568/tonne and skim milk powder, falling 4.6% to $2,538/tonne. Butter was 2.8% lower at $3,438/tonne.


There was a 3% increase for anhydrous milk fat to $3,994/tonne while lactose gained 5.7% to $1,349/tonne.


Commonwealth Bank of Australia analyst Tobin Gory commented that no major category was spared a hefty fall in the latest event. “With those falls the supply-chain padding - a risk management response to the pandemic - seems to have passed its peak.


“The auction’s blink though has not left a neat configuration behind. NZ prices look fair value compared to spot WMP in Europe. Prices either side of the turn of the year look a little cheap,” Mr Gorey concluded.

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