Wednesday, 16 September 2020
By Kat Jack
The Global Dairy Trade (GDT) price index rose 3.6% at the latest event (15 September) off the back of a rise in powder prices, with SMP in particular performing better than market expectations for the event.
The SMP weighted average price for the event moved up 8.4% on the previous event (1 Sep) to $2,889/tonne. WMP was also up 3.2% at US$3,092/tonne. Together, these two products make up around three quarters of volumes sold. However, Fonterra removed 10,000t of SMP from the GDT platform earlier in the month, which reduced the volume of SMP available and may have helped support prices.
For SMP, this jump has contributed notably to its price recovery, as prices fell during January-May. It is likely that the coronavirus pandemic impacted on trade demand, particularly from China, but that this has since been recovering.
The average price for SMP at the first event for the year was $3,026/tonne, while the lowest average price in 2020 was $2,373/tonne at the 5 May event. With the latest price at $2,889/tonne, there is still a little way to go to return to levels seen at the beginning of the year. However, with New Zealand’s milk production rising towards its seasonal peak in October, the pace of price recovery may be limited by increasing supplies.
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