GDT price index back in decline for October

The Global Dairy Trade overall price index fell 4.6% to US$3,723/t at the latest event (18 October) in a return to the dominant trend of the past 7 months. This follows a 3.5% decline at the 4 October event but is in contrast to the two consecutive increases seen in September. Since 15 March, 12 out of the 15 events have had a decline in the overall price index.

This decline in prices has been mainly driven by reduced demand. Although the platform trades products to and from multiple countries, the biggest driver is product going from Oceania to China, particularly WMP. Chinese imports have been notably down this year, from a combination of reduced demand due to a strict covid restrictions, and improvements in domestic supply and self-sufficiency. Additionally, reports suggest that South-East Asian buyers bought less than expected in October, as they are already well stocked for Q4 and can afford to wait for further price drops.

So far, we have not yet seen the same trend in Europe, with both EU and UK wholesale prices remaining at high levels in recent months, avoiding any large declines. They have been relatively protected by being less reliant on China as a destination and having a larger domestic market to serve compared to Oceania. While product supplies remain in balance with, or lower than demand, prices will continue to be supported. However, exports are still important to the EU market, and the current high prices relative to other regions will serve to lower this demand, potentially countering the supply side tightness and putting prices under pressure.

Sign up to receive the latest information from AHDB.