Dairy Trade: Slight correction in dairy stock after price rise streak

International dairy trade has been going gangbusters in recent months — but is the latest trading period a blip or a concern?

International dairy trade has slightly dipped overnight after a skyward trajectory that caused prices to rise by 18 per cent in a two-month period.

The latest Global Dairy Trade auction has gone against predictions to record a fall in the latest session, following a record high earlier this month.

Prices in the overnight GDT auction settled on a 0.9 per cent drop across the board — however, the headline figure of US$5039 ($A7004) is still the second highest index recorded in the past decade.

Whole milk powder slipped 2.1 per cent to an average US$4596 (A$6388) per megatonne, following a 5.7 per cent increase at the previous auction.

However, skim milk powder lifted 1.6 per cent to an average US$4545 (A$6318) per megatonne, hot on the heels of the whole milk indicator.

Agricultural market analysts forecast dairy prices to remain robust in coming months due to dwindling global supply and volatile trading conditions triggered by Russia’s invasion of Ukraine in the past fortnight.

Westpac NZ agri-economist Nathan Penny this week said rising coronavirus case numbers in some of China’s largest industrial centres had injected some uncertainty into dairy trade.

However, his weekly report said that “the impact of the Russia-Ukraine conflict has given global dairy prices fresh impetus.

“With global dairy supply also very weak, we expect prices to remain hot in the short term.”