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GDT starts 2023 with a fall
Thursday, 5 January 2023
Prices fell again at the 3 January Global Dairy Trade event, with the overall price index declining 2.8% from the previous event. This decline was seen across all products, including WMP down 1.4% and SMP down 4.3%. Although there have been some periods of uplift, prices have been in overall decline since their peak in March 2022, tracking the steady increase in global milk supplies. As of this latest event, the overall index is now back to levels last seen at the end of 2020.
Powders make up most sales on the platform, with WMP making up about half of volumes sold and SMP just under a quarter. Powder markets are particularly influenced by Chinese buying activity, which has been subdued in 2022, putting downwards pressure on prices. Currently, the outlook for import demand from China remains uncertain. On the one hand, the easing of Covid restrictions may boost economic activity, and in turn demand for dairy. On the other hand, the subsequent outbreaks of Covid following the removal of most restrictions will continue to pressure China’s economy
In addition, the global picture for markets is still on the negative side. According to Rabobank, expectations are for demand to continue to weaken as a response to costs, while supply is likely to grow as the impact of higher milk prices comes to fruition. For powders in particular, the reduced global demand combined with the high cost of drying will continue to put an extra squeeze on producers.
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