When will global milk production hit a tipping point?
With global milk prices falling, the question is when will key exporting countries reach a tipping point where production starts to dip.
The overnight Global Dairy Trade (GDT) auction saw the price index slip 4.2% from the prior event.
However, Bailey says the results may be considered somewhat positive compared to other dairy markets over the same time.
US May futures prices for Class IV milk (non-fat dry milk/SMP and butter) fell by 10% since April 7 and are now down 41% since the start of the year.
By comparison, skim milk powder price overnight was down 5.3% since the last event, and down 21% since January 7.
He says mixed in with these results are some pieces of good news. Cheddar and lactose prices increased 2% and 12%, respectively, from the last event, and are 12% and 35%, higher from the start of the year. A combination of relatively small volumes offered and a specialised buyer requirement play a role in this price improvement.
However, more challenging is the continued price decline in core products such as WMP and SMP, says Bailey.
“North Asian demand purchases increased 43% from the previous event but were not enough to offset the declines seen in Southeast Asia (SEA), Middle East, and Africa (MEA), which fell a combined 44%.”
Key results
AMF index down 7.0%, average price US$4,083/MT
Butter index down 3.6%, average price US$4,117/MT
BMP not offered
Ched index up 1.9%, average price US$4,480/MT
LAC index up 12.0%, average price US$1,078/MT
RenCas index down 3.0%, average price US$9,409/MT
SMP index down 4.9%, average price US$2,380/MT
SWP not offered
WMP index down 3.9%, average price US$2,707/MT
