Tighter supply pushes global dairy auction prices higher

Dairy commodity markets increased for the fourth consecutive fortnight at Fonterra’s latest auction on Tuesday (18 September).

The weighted average price rose by 2.4%, to US$3,249/t (£2,031/t). That is an 18% increase over the past two months and the highest price since 3 April 2012. However, it is a smaller jump than at the previous three sales, indicating that the upward trend may be slowing.

Skimmed milk powder averaged a 4.7% increase, to $3,339/t (£2,087/t), with whole milk powder up by 2% to $3,036/t (£1,898/t), and cheddar rising 1%, to $3,589/t (£2,243/t).

Back in the UK, daily deliveries continue to fall below last year, with milk production in the two weeks to 8 September averaging 33.5m litres – 4.4% lower than the same time last year and 3% below the three-year average.

Higher domestic milk prices have started to attract imported milk from Ireland, Belgium and possibly France. “While very little spot milk is traded, reports from traders confirm sales at 37-39p/litre, which must be 40p plus delivered after brokers’ fees,” said a report by milk quota trader Ian Potter. “At these levels cheese processors will sell milk rather than turn it into cheese.”

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