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GDT auction sees another step down in prices
Thursday, 3 November 2022
At the latest GDT event (1 November) the overall price index fell 3.9% to $3,537/tonne. The main driver for the drop was a large downturn in the SMP price, which fell 8.5%. WMP also saw significant decline, dropping 3.4%. Butter and cheese recorded marginal gains.
Production of SMP in New Zealand is currently estimated to be around 15%-27% higher than the year earlier, according to NZX, the main dairy trading exchange. This increase in available product is likely to be the driving force for the declining price index. Buying interest on the platform remained strong for EU product however, likely due to the tight supply situation there.
Contrary to SMP, production of WMP in New Zealand remains well below historic volumes. Fonterra are reported to have a target of producing 250,000 tonnes less WMP this season, according to NZX. There is little appetite to increase production with demand from China weakening on the back of high stocks and ample milk production.
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