The Global Dairy Trade (GDT) index suffered a significant blow as it plummeted by 4.7% in the latest trading event. The index, which tracks commodity prices of dairy products, saw a sharp decline due to a combination of factors including uncertainties caused by the ongoing COVID-19 pandemic and the increasing milk production across major dairy-exporting countries. This news has raised concerns amongst dairy farmers and industry professionals alike, as they try to navigate an already challenging market. In this article, we will take a closer look at what led to the recent drop in the GDT index and what implications it might have for the dairy industry going forward.
The fourth consecutive decrease of the Global Dairy Trade (GDT) index was recorded today (Tuesday, April 4), after falling 4.7% in the latest trading event. The last time the index suffered a similar decrease was on October 18th last year when it fell by 4.6%. The average product price was $3,227/MT, reflecting an index figure of 964. This is the lowest index figure since November 2020 and the first time since then that it has been less than four figures. The event lasted two hours and 15 minutes, with 138 bidders participating across 17 bidding rounds, and the total amount of products sold was 23,828MT.
Except for one product, all other products offered at the event saw decreases in their respective sub-indices. Anhydrous milk fat (AMF) had the largest decrease, falling by 7.2% to a price of $4,736/MT. Whole milk powder (WMP) saw a significant drop with its sub-index falling by 5.2% to a price of $3,053/MT. Butter and butter milk powder (BMP) both fell back by 3.3% to prices of $4,595/MT and $2,529/MT, respectively. Skim milk powder (SMP) saw a decrease of 2.5% to a price of $2,579/MT. The cheddar sub-index was the only one to record an increase of 3.8% for a price of $4,167/MT. The results for this trading event did not include data for lactose.
Furthermore, Fonterra, one of the owners of the GDT, has cut its forecasted farmgate milk price for the 2022/2023 season due to the drop in dairy demand from China and the peak of milk production in the northern hemisphere. Its forecasted milk price range for the season is expected to drop from NZ$8.20/kg to NZ$8.80/kg, with a midpoint of NZ$8.50/kg to NZ$8.00/kg to NZ$8.60/kg, with a midpoint of NZ$8.30/kg. Fonterra Chief Executive, Miles Hurrell, stated that the decision reflects short-term demand for dairy products that the co-op uses to set the milk price, which was “softer than expected”.
Overall, the recent 4.7% drop in the Global Dairy Trade (GDT) index is a clear indication that the dairy industry is facing challenges in the current economic climate. While fluctuations in pricing are expected, the impact of COVID-19 and other factors have resulted in a significant decline. However, it’s important to note that the market is resilient and there are measures in place to mitigate the impact on farmers and consumers alike. As the industry continues to navigate these uncertain times, it’s crucial to remain vigilant and proactive in finding solutions to keep the dairy sector stable and sustainable.
