Global dairy index jumps to 28-month high

Fonterra’s Global Dairy Trade index, an indicator of worldwide market sentiment has leapt 11.4% to the highest level since 1 July 2014. 

The latest auction result (1 November 2016) means the index is 13.1% up on a month ago and 33.3% higher on the same time 12 months ago.

 See also: Dairy farmer frustration grows over low milk prices

Despite falls in some of the smaller markets, significant sales of whole milk powder (WMP), which pushed its index price up 19.8%, and skimmed milk powder, which rose 6.5%, drove the index to its highest level for 56 auctions.

Butter and anhydrous milk fat also increased their average price, increasing 4% and 2.6% respectively.

AHDB Dairy attributed the rise in WMP, which accounted for almost half of all auction sales, to a drop in New Zealand milk production, with Fonterra reducing its forecasts for 2016-17 volumes.
 
The levy board added that volumes for New Zealand product sold on the GDT were 20% down on this time 12 months ago and 40% below the five-year average, helping to drive auction prices upwards.

GDT events measure bids from dairy commodities from participants spanning 80 countries across the world, including the EU, New Zealand, Australia, India and the US.

Futures contracts: farmer views wanted

Do you use futures and options markets to help you manage risk? Or are you interested to learn more? Farmers Weekly is keen to find out the extent to which UK farmers use these markets. Complete our survey here.

Take the survey

Futures markets and commodity risk management online course:

  • Risk management strategies for a more predictable financial performance
  • Educated conversations when collaborating with your advisors
  • Negotiate better prices with your grain merchants

View course