A reduction in the supply of goods at the auction, an increase in prices for butter and milk powder, as well as a certain activation of demand, contributed to another rise in the price index following the auction results, reports Georghii Kuhiashvili, an analyst at the Association of Milk Producers.
On Tuesday, February 17, the 398th GDT auction took place, resulting in a price index of 1202, which is 41 points (+3.6%) higher compared to the previous auction. The average price for dairy products was 4,028 USD per ton, which is 198 USD more compared to the results of the previous auction. During the trading, 22,240 tons of commodities were sold, which is 474 tons less than the results of the last auction. The minimum supply was recorded at 20,706 tons, and the maximum at 27,054 tons. 167 dairy market operators participated in the auction, which is 8 companies fewer compared to February 3.
According to the auction results, the price for Anhydrous Milk Fat was 6,751 USD per ton, which is 3.8% more compared to the previous auction. It is likely that prices were influenced by the fact that the peak of seasonal milk production has already passed in Oceania and South America. According to USDA data, milk fat prices decreased in Europe last week due to buyer indecision, ongoing concerns about demand, and difficulties in product sales. According to the GDT forecast, anhydrous milk fat may decrease by 4.3% in March and rise by 3.9% in April.
The price for Butter at this auction was 6,347 USD per ton, which is 10.7% more compared to the results of the previous auction. The price of butter in the USA is recovering due to increased demand in retail chains, but the lack of growth in demand from food industry enterprises partially restrains a sharp rise in butter prices. In export markets, demand for American butter is stable, but market participants suggest that amid rising domestic butter prices, demand for the American product in export markets may begin to decline. In Europe, butter prices strengthened last week, with buyers mostly covering short-term needs, and no rush was observed. In Oceania, butter prices are rising amid increased demand and expectations of a reduction in supply, as the active milk production season in the region is ending. Auction organizers expect the price of butter to increase by 13% in March and possibly by 9.8% in April.
The price for Whole Milk Powder was 3,706 USD per ton, rising by 2.5% compared to the results of the previous auction. According to USDA data, last week whole milk powder prices in the USA and Europe were pushed up by the rising cost of butter and skimmed milk powder. A similar situation was observed in Oceania, where the product became more expensive amid shrinking whole milk powder stocks and a decrease in milk volumes arriving for processing. Despite the fact that whole milk powder from the EU is more expensive compared to the product from Oceania, demand for it in export markets is growing amid a reduction in supplies from New Zealand. In South America, whole milk powder prices have not changed over the last week, and demand for the product is stable. However, the "flush" season has passed in the countries of the region, and raw milk production has begun to decline in Argentina, Brazil, Uruguay, and Chile. Auction organizers predict a price increase for the product by 3.7% in March and by 1.8% in April.
The price for Skimmed Milk Powder was 2,973 USD, which is 3% more compared to the results of the previous auction. Skimmed milk powder is becoming more expensive in Oceania amid a seasonal decline in milk production and a reduction in warehouse stocks, and it already costs more than the European product. The activation of demand is contributing to the rise in skimmed milk powder prices in Europe. In the USA, prices for the product are rising amid shrinking warehouse stocks, and some buyers are already finding it problematic to find the required volumes of the product on the spot market. However, demand from buyers in Mexico for the American product has slowed down. According to the GDT forecast, skimmed milk powder may increase in price by 0.2% in March and by 2.8% in April.
Cheddar Cheese decreased in price to 4,736 USD per ton (-1%), while Mozzarella Cheese increased in price to 3,879 USD per ton (+5%). According to USDA data, export demand for American cheeses is strong, quite active in retail chains, but weak among food industry enterprises. Cheesemakers face increased competition for available raw milk from producers of UHT milk, who have intensified purchases. In Europe, the supply of cheeses on the spot market is decreasing, while the demand for European cheeses in the world is quite active. Auction organizers expect that Cheddar cheese may increase in price by 2% in March and by 0.3% in April, while Mozzarella cheese may increase in price by 4.6% in April.
Lactose increased in price to 1,519 USD per ton (+7.8%). According to USDA data, lactose prices are higher than last year, warehouse stocks of the product are limited, and demand in export markets is quite active. Auction organizers predict a 7.8% increase in lactose prices in April.
The next GDT auction will take place on March 3.
Press Service of the Association of Milk Producers
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