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GDT Price Index continues the descent
Thursday, 3 August 2023
The fortnightly GDT Price Index is on a downwards path. The latest event held on 1 August 2023 produced an overall decline of 4.3% to an index of $3,100. The index is in overall downtrend from March 2022 with some minor recovery in between.
SMP was down by 1.4% to $2,454, cheddar was down by 1.4% to $3,910 and butter declined less by 0.7% to $4,680. The key driver of the loss was WMP which recorded a substantial decline of 8.0% at $2,864.
The major market for WMP is China and demand from China remains lackluster amid comfortable domestic supplies. China’s total milk production in 2023 is forecast over 42 million tonnes, which is a 4% increase over 2022 from production efficiency gains and a larger cattle inventory, according to estimates by the USDA. They also estimate an increase in WMP production in China to nearly 1.2 million tons due to strong growth in domestic milk production, reducing the need for imports.
Whilst these falls are undoubtedly alarming, WMP is not widely produced in the UK which would pressure the market less than a sharp fall in SMP, butter or cheese for example. Regardless, the overall tone is gloomy and where one product goes, the others may follow.
The major factors contributing to the overall downtrend are an increase in global milk supplies and poor demand leading to general oversupply. Rabobank reports that global milk production is still growing but less so then previously with growth mostly attributable to the US. Latest global milk supply is reported to be 1.1% higher year on year. Prices are now sitting at pre-covid levels, with the exception of butter which remains a little ahead.
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