Wednesday, 18 March 2020 08:29

Covid-19 hangs over dairy prices

Written by  Staff Reporters
Global dairy prices have slumped for the fourth consecutive time. Global dairy prices have slumped for the fourth consecutive time.

Global dairy prices have slumped for the fourth consecutive time in 2020 and coronavirus (Covid-19) is to blame.

The overnight Global Dairy Trade (GDT) auction saw the price index drop by 3.9%; whole milk powder prices dropped 4.2% to US$2797/metric tonne.

Rabobank senior dairy analyst Emma Higgins says clearly the onset of coronavirus stalled the upward trajectory in global dairy prices visible in late 2019 and the corona hangover continues as evidenced by the GDT Event held overnight. 

She says last night’s results are now the fourth decline for 2020.

“The GDT Price Index moved lower by 4% with average prices now sitting below USD 3,000/tonne (USD 2,980/tonne). This is now in line with average prices back in January last year. Buyers and sellers are still scrambling to assess the market impact as the spread of the virus moves from China to more broadly across the globe.”

Key results

AMF index up 1.0%, average price US$4,331/MT

Butter index up 0.3%, average price US$4,144/MT

BMP not offered

Ched index up 2.6%, average price US$4,398/MT

LAC index up 4.9%, average price US$914/MT

RenCas index up 1.0%, average price US$9,987/MT

SMP index down 8.1%, average price US$2,527/MT

SWP index not available, average price not available

WMP index down 4.2%, average price US$2,797/MT

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$7-plus still on the cards

Despite four consecutive drops in Global Dairy Trade (GDT) prices, analysts are sticking with a payout of around $7.20/kgMS for this season.

Is China back?

There was a silver lining to the fourth straight drop in global dairy prices last week: demand in China is recovering.

Dairy fundamentals looking good

Independent economist Cameron Bagrie says dairy fundamentals are looking pretty good, despite the GDT dropping in the past three auctions.



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