Prices at yesterday’s Global Dairy Trade auction lifted off three-and-a-half-year lows with the index up 4.6%.
The key whole milk powder index (WMP) also rose by the same amount, up 4.6% on the previous event.
The WMP gain builds on a 5.2% rise at the preceding GDT event in early September but wasn’t quite as strong as the gains signalled in the dairy futures market earlier this week.
Commenting on the auction, Dairy Market Analyst at ASB Bank in New Zealand Chris Tennent-Brown said while it was pleasing to see prices recover further, the bank remains cautious on the outlook.
“Prices are lifting off three-and-a-half-year lows. We still believe a sustained recovery in Chinese demand is a necessary precursor to a substantial recovery in prices.
“On that front, it was pleasing to see a significant lift in the quantity of WMP purchased by China at this event.
“China’s share of WMP purchases at this event spiked, with the proportion on offer purchased not seen since April.
“Beyond the all-important WMP, other products also enjoyed gains at this auction. Skim milk powder prices were up 5.4%, again with increased Chinese demand evident. Anhydrous milk fat prices were also up 5.4%, and butter prices were up 3.8% at this event. Cheddar prices missed out on the gains though, slipping 1.7%,” he said.
Brown said ASB retains its current forecasts for milk prices but is pleased to see some upside risk develop in the auction.
“We look forward to October’s auctions to see if the improved demand from China is sustained,” he said.
It comes after all major Irish milk processors announced cuts to their milk price for August supplies in recent days.
