Global Dairy Trade Prices Fall Again

GLOBAL - The results of the latest Global Dairy Trade (GDT) auction has shown a fall in the GDT price index of 1.4 per cent.
calendar icon 20 January 2016
clock icon 2 minute read

This is the second event in a row in which prices have fallen.

The average price at the auction was $2,405 (USD/MT, FAS).

New Zealand's Federated Farmers organisation warned that the results put Fonterra’s forecast farmgate payout of $4.60/kg increasingly out of reach.

GDT is owned by the dairy co-operative Fonterra, and over 10,000 of the company's farmer-shareholders are based in New Zealand.

“Today’s weak GDT result is disappointing and things are certainly looking much worse in terms of the farmgate milk price. We have just seen Open Country Dairy drop its forecast and this result increases the likelihood Fonterra will do the same,” said Federated Farmers Dairy Chair Andrew Hoggard.

“It is still possible that a sudden upswing in prices could get us there, but we’d need to see some very large increases in the next couple of months to reach the $4.60 mark.

"Even that is a fairly poor payout for most farmers, and falling below that is just going to ramp up the pressure on the dairy industry and those that support it.”

But Mr Hoggard is urging farmers to have faith in the GDT model.

“This isn’t about the system. It’s economics 101. Supply is too high and demand is weak, which is keeping prices down. If kiwi farmers want to lay the blame somewhere they should look offshore to the subsidised production that still exists in too many other countries. Farmers in these markets are increasing production despite the market telling them the opposite.

“Kiwi farmers need this to be addressed and for more trade deals to open up new markets and grow the overall pie. New agreements such as TPP have the potential to make a big difference over time but unfortunately they won’t ease the short term pain our dairy farmers are feeling,” Mr Hoggard concluded.

The biggest fall in price at the GDT auction was Rennet Casein, with a decrease of 7.8 per cent.

Skim Milk Powder prices fell by 3.2 per cent, whilst Whole Milk powder prices fell by 0.5 per cent.

Cheddar prices also fell, by 3.4 per cent, and Butter fell by 5.9 per cent.

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