The most recent auction on the  GDT platform produced a delighted reaction from the dairy farming community in the southern hemisphere.  This is on the face of it, surprising, as the upwards price movement was really very small, just 1.7%.

The reason for their joy is that it followed a huge price fall for WMP at the previous auction of more than 12%.  Furthermore, this week’s price rise was despite both an increase in quantities offered, and despite a futures market that had “predicted” a 5% price fall.

Of particular interest to them is that within that overall rise was an increase of 2.9% for WMP, the main dairy commodity produced by NZ farmers.

The continuing bad news story from the GDT auction is the SMP price fall, of most relevance to European dairy farmers, including UK producers.  The SMP price fell a further 10.1%, to $US1948 per tonne.  The SMP offered by Arla and Amul either did not sell, or sold at its starting price.  Global stocks are just too high for it to attract much interest.  But at least the butter produced as the other part of the SMP production process is attracting good demand.

It has to be remembered that the SMP price fall comes on top of the 15.5% fall at the previous auction and must – at least in part – be the reason for Arla’s milk price fall from 1st April recently announced.  This is bad news indeed, and with the spring flush upon us, will probably be repeated for May.  The EU intervention stores are likely to be opened again to receive even more SMP shortly.

To discuss milk pricing issues contact Charles at charlesholt@fcgagric.com