Dairy Prices Fall Again at Latest Global Dairy Trade Auction

GLOBAL - This week's Global Dairy Trade (GDT) auction saw a fall in the GDT price index by 2.8 per cent compared with the previous event.

18 February 2016

2 minute read

This is the fourth event in a row where prices have fallen. GDT prices have not seen a rise since mid-December.

The average price achieved at the event was $2,235 (USD/MT, FAS).

Cheddar saw a fall in price of 5.6 per cent, whilst whole milk powder prices fell by 3.7 per cent. Skimmed milk powder prices fell by 1.4 per cent and butter prices by 2.3 per cent.

The GDT auctions are run by dairy cooperative Fonterra, based in New Zealand.

New Zealand's Federated Farmers organisation said that the price falls would lump further pressure onto dairy farmers.

A poll of 1,225 Federated Farmers members conducted at the beginning of February showed that more than one in 10 dairy farmers (11.1 per cent) are now under pressure from banks over their mortgage, up from 6.6 per cent in August and 7.6 per cent in November.

“So far we’ve been pleased with the support of banks and their long-term view of the dairy industry, but when you’re talking about one in 10 farmers feeling the squeeze that’s a worrying statistic,” said Federated Farmers Dairy Chair Andrew Hoggard.

“With prices not expected to recover until next year this increase in pressure from banks means farmers need to be even more pro-active around budgeting and scenario planning, and make the most of the support available from DairyNZ, accountants and farm advisors."

Mr Hoggard is also calling for action to be taken to address the global market conditions impacting on New Zealand’s dairy farmers.

“Softer demand from China and displaced product from Russia isn’t helping the situation, but the real issue at the moment is increased production from Europe driven by the retention of subsidies,” he said.

“It’s concerning that some European countries are wanting to move backwards to more regulation. Instead they need to keep moving forward to more market orientated structures.

"The more farmers around the world live with the economic realities of the decisions they make, the more stable a market we will get for all farmers.

“This is something our government needs to take up through direct diplomatic channels and the World Trade Organisation, and if next season is going to be any different to this one they’re going to have to move quickly,” Mr Hoggard said.