According to GDT auction results, prices for anhydrous milk fat, butter, whole milk powder, and skim milk powder increased against the backdrop of slowing raw milk production in Oceania and intensified demand ahead of the Chinese New Year and Ramadan. However, prices for cheeses decreased due to overproduction in Europe, and lactose prices fell due to slowing demand at the beginning of the year, reports Georghii Kuhiashvili, analyst at the Association of Milk Producers.
On Tuesday, January 20, the 396th GDT auction took place, resulting in a price index of 1088, which is 16 points (+1.5%) higher compared to the previous auction. The average price for dairy products was $3,615 per tonne, which is $82 more than the results of the previous auction. During the auction, 27,821 tonnes of commodities were sold, 1,461 tonnes less than the results of the last auction. The minimum supply was recorded at 27,999 tonnes, and the maximum at 35,056 tonnes. 164 dairy market operators participated in the auction, which is 13 companies fewer than on January 6.
According to the auction results, the price for anhydrous milk fat was $6,191 per tonne, up 3% from the previous auction. According to USDA data, milk fat prices decreased in Europe last week due to a high supply of cream. However, anhydrous milk fat futures rose in Oceania, where the seasonal peak of raw milk production has passed and yields have begun to decline. According to the GDT forecast, anhydrous milk fat may increase in price by 7.7% in February and by 2.5% in March.
The price for butter at this auction was $5,314 per tonne, which is 2.1% higher than the results of the previous auction. According to USDA, butter producers in the US are operating at full capacity, taking advantage of the high supply of cream in the market. Demand for packaged butter is active from retail chains as prices remain low. Demand for butter from food industry enterprises is slow. According to industry participants, last week demand for American butter was less active in export markets compared to the previous quarter.
However, an exception is 82% fat butter, for which demand from foreign buyers outpaces production. In Europe and Oceania, butter prices increased slightly last week. Buyers are primarily purchasing European products to cover short-term needs. In Oceania, the "flush" season peak has passed, and butter production volumes are decreasing in parallel with intensifying demand. Auction organizers expect the price of butter to decrease slightly in February (-0.4%) but rise by 2.9% in March.
The price for whole milk powder was $3,449 per tonne, rising by 1% compared to the previous auction. According to USDA, whole milk powder futures rose in Oceania after the previous auction. Demand in export markets intensified, likely due to preparations for the Chinese New Year and Ramadan. Argentina and Uruguay increased shipments of whole milk powder to Algeria. Products from Oceania are priced lower than European whole milk powder and therefore sell better in export markets. Prices for the product rose in Europe and the US last week as buyers purchased goods to cover short-term needs. Auction organizers forecast a price increase of 0.3% in February and 0.7% in March.
The price for skim milk powder was $2,615, up 2.2% from the previous auction. As reported by USDA, prices for the product rose in the US, Europe, and Oceania. Buyers from Mexico intensified purchases of skim milk powder from the US, even at higher prices. European products are selling steadily to cover the current needs of clients. Skim milk powder is becoming more expensive in Oceania as the peak of raw milk production in the region concludes, though it remained more price-competitive than European products. Buyers are likely increasing purchases due to preparations for Ramadan and the Chinese New Year. Notably, the largest share of goods in the recent auction was sold to buyers from North Asia. According to the GDT forecast, skim milk powder may increase in price by 2.2% in February and by 2.1% in March.
Cheddar cheese decreased in price to $4,594 per tonne (-1.4%), and Mozzarella cheese fell to $3,340 per tonne (-2.3%). According to Err.ee, cheese prices are declining in Europe due to overproduction, and producers warn of a likely price reduction in February–March. As reported by USDA, adverse weather conditions in Europe led to certain logistical obstacles and delays in cheese shipments from processing plants. There is active demand for cheese in Europe from food industry enterprises.
In the US, cheese demand is active in retail but has weakened from the food industry. Interest in American and European cheeses remains active in export markets due to competitive prices. Last week, export prices for Cheddar cheese rose in Oceania amid active demand in foreign markets and the start of the seasonal decline in raw milk production. Auction organizers expect Cheddar cheese to decrease in price by 1.5% in February and 0.5% in March, while Mozzarella may decrease by 2.4% in March.
Lactose decreased in price to $1,385 per tonne (-1.8%). Lactose is used in the food and pharmaceutical industries as a filler or excipient for medications. The price of lactose likely decreased due to low buyer activity. Typically, in January, pharmaceutical companies review budgets and are in no hurry to conduct large tenders, while demand from confectioners slows as candy production decreases after the New Year holidays and production facilities undergo maintenance. Companies usually stock lactose in October–December for the first quarter and in March–April for the second quarter. January and February are considered the off-season in the lactose market. According to USDA, lactose stocks in the market are limited. Auction organizers forecast a 1.8% decrease in lactose prices in March.
The next GDT auction will take place on February 3.
Press Service of the Association of Milk Producers
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