On Wednesday, February 7, the 235th GDT auction took place, as a result of which the price index reached 1063 and increased by 33 points compared to the results of the previous auction on January 17. The index increased for the first time since December 2022.
This was reported by the analyst of the Association of Milk Producers, Gеorgiі Kukhaіleshvili.
166 participants took part in the auction. 32,582 tons of dairy products were sold in 21 rounds within 2.5 hours.
"The average price of dairy products increased by 1.82% to 3456 dollars. The minimum price offer was fixed at the level of 29,250 tons, and the maximum at the level of 35,290 tons," the expert emphasizes.
The most increase in the auction was demonstrated by the price index for butter - $4,745. per ton, which is 6.6% more than during trading on January 17. The price of dehydrated milk fat increased by 4.8% to $5,586. per ton This is due to increased demand for these dairy products in the EU and the USA in recent weeks. According to GDT forecasts, the price of butter is expected to increase by 6-6.6% and for dehydrated milk fat by 3.8-6.8% in March-July.
The price of Cheddar cheese rose to $4,980. per ton (+2.3%), and dry buttermilk increase to $2,633. per ton (+2%).
The reasons for the increase in prices for certain types of dairy products are also inflation for consumer goods, an increase in the cost of production due to an increase in energy tariffs. According to the Statistics Netherlands Agency, in January 2023, consumer goods inflation amounted to 7.6%. The price of cheese in UK shops has risen by 50% in the past two months due to inflation and increased production costs.
According to John Allan, the chairman of the board of the British supermarket chain Tesco, food manufacturers are forced to deliberately raise the prices of their products due to inflation. According to the GDT forecast, prices for Cheddar cheese, after a slight decrease of 0.9% in March, will go up until July (+3-3.9%). In June-July, prices for dry buttermilk are forecast to increase by 7% and 4.5%, respectively.
Dry whole milk rose in price by 3.8%, and the price per ton of product was 3,329 dollars. per ton The price of skimmed milk powder showed an insignificant decrease. According to the results of these trades, it amounted to 3,329 dollars. per ton, which is $13 less than the price of the last auction. The increase in prices for whole milk powder is due to large purchases by China at this auction. Expectations regarding the activation of buyers from the People's Republic of China after the end of the Chinese New Year celebrations were fulfilled.
Stabilization of milk powder prices may be related to the tender of the Algerian company Soummam. At the end of January, an African client announced a tender for the supply of 10,000 tons of dry milk. Price increase is expected for dry whole milk at the level of 3.6-4.6%. Skimmed milk powder prices are expected to increase by 0.3-1.6% monthly from May to July.
Gеorgiі Kukhaіleshvili notes that the potential of the Chinese market should not be exaggerated. "According to China Dairy's latest report, the production of whole milk powder in China increased by 66 thousand tons in the fourth quarter of 2022. As of the end of 2022, stocks of this product amounted to 143,000 tons. Factors that indicate that the demand for milk powder in China will decrease include the increase in the supply of this product in the domestic market, as well as the increase in the production of raw materials (raw milk) by Chinese farms. Accordingly, according to Freshagenda, the purchase price of raw milk is decreasing in China. In China, there are solid stocks of dry milk in warehouses," says the AMP analyst.
The auction organizers did not publish data on lactose, which may indicate low interest of bidders in this product and insignificant purchase volumes. There were no bids for dry sweet whey at the GDT auction. The organizers of the auction also refrained from forecasting these positions for the coming months.
The next GDT auction is scheduled for February 21.
Press service of the Association of Milk Producers