GDT dairy auction increase brings hope for farmgate prices

The latest GDT online dairy commodity auction posted a gain of 15%, raising hopes for farmgate milk prices this spring.

Values were pushed up by strong global demand for dairy commodities and lower-than-expected milk output figures in key producing countries.

This was the eighth gain in the past nine auctions, and took the index to 1,346 – the highest level in seven years – with the size of this latest jump surprising many observers of the steadily rising dairy market.

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The fortnightly sale achieved an average price of $4,231/t (£3,027/t), with whole milk powder and butter posting the strongest gains, up 21% and 13.7%, respectively.

Strong demand

China is leading the demand surge for dairy products – mainly whole milk powder – while demand is also strong in south-east Asia. World stocks of cheese and butter in January turned out to be lower than expected.

Milk production reports also came in weaker than expected for the US, New Zealand and Europe for January, reports commodity group StoneX.

EU dairy commodity prices have firmed recently, with declines of 2-5% being seen in weekly French and German milk collection reports.

All eyes will now be on the weather and grass growth rates in Europe in the build-up to the spring flush.