Global Dairy Trade: Commodity price rollercoaster as prices rise

International dairy prices have finally lifted after more than four months on the slide — but experts are urging caution.

South-East Asian buyers have given the international dairy index its first lift in more than four months, bouncing off a seven-year low.

Somewhat easing concerns for Australian processors, the Global Dairy Index this week rose for the first time since early May.

The GDT headline figure now sits at $US2888 ($A4536) per tonne, up 2.7 per cent from last fortnight’s horror result of $US2875 ($A4516) per tonne.

But the refreshed $US2888 per tonne average still represents a 40 per cent decline from dizzying heights of March 2022, when the headline figure was soaring at US$5039 ($A7804).

The substantial fall has heightened concerns about the cost competitiveness of imported butter and cheese within the Australian dairy processing sector, with New Zealand offloading substantial volumes into Australian supermarkets in recent weeks.

Rabobank dairy analyst Emma Higgins said while the latest GDT result was welcome news for farmers and processors, it was too early to declare a price recovery.

She said Chinese buyers eased off in this week’s GDT trading session with South-East Asian interest filling the void.

New Zealand butter is being sold in greater volumes in Australia in recent months. Picture: Zoe Phillips

“We’re certainly on a commodity price rollercoaster right now and we’re just taking a few twists and turns,” Ms Higgins said.

“I think it’s too early to say that we’re heading on the upwards trajectory again.

“But we’ll take that win (from the latest GDT result) because all commodities saw that rise in prices except the skim milk powder price.”

Ms Higgins said this week’s trading session was notable for strong cheese demand out of the Middle East.

“At these price levels, it’s a real buying opportunity for many regions. There’s plenty of product available and affordable prices mean we’re seeing really broadbased demand emerging on the GDT.”

New data from the Australian Bureau of Statistics confirmed NZ butter shipments were up 62 per cent in the 12 months to June 2023.

United Dairyfarmers of Victoria president Mark Billing said the cheap Kiwi imports were being dumped in Australia on the back of New Zealand farmers being paid below the cost of production for their milk.