Dairy prices are hitting new highs. What lies ahead for milk producers?
The global dairy market is undergoing significant changes. Dairy prices are up, as evidenced by the latest trading session on the "Global Dairy Trade" (GDT) trading platform.
We have previously reported that dairy prices on the GDT platform have reached their highest levels in the last 2 years, but it seems that the upward trend is becoming more sustainable.
During the last GDT trading session, which took place on 5 November, the GDT index rose by as much as 4.8% to 1 216 points. The GDT Index has not been this high since September 2022.
All dairy products increased in price during the last session, except lactose, which fell by 6.1%. Price increases were recorded for butter (+8.0%), buttermilk (+4.6%), whole milk flour (+4.4%), skimmed milk flour and Cheddar cheese (+4.0% each), butter flour (+2.1%) and Mozzarella cheese (+0.9%).
What does the price graph show?
The last trading session is leading dairy producers to expect higher farm gate prices. What is the rationale behind this? From the chart of the GDT index values provided by the platform, it is almost certain that the increase in dairy prices is becoming truly sustainable, which implies a consistent increase in the farm gate prices for dairy producers. It is in the interest of processors to maintain a secure relationship with farmers, so it is inevitable that the recovery of the markets signals price increases for farmers. In some places by a higher proportion and in others by a lower proportion (e.g. Lithuania), but the trend of paying more today than you paid yesterday remains. While from March 2022 to September 2023 we saw a consistent downward trend in dairy prices, by now we have been seeing a gradual increase in the price of dairy products for more than 1 year now. A similar trend is expected to continue for at least another 3-4 months. After that, the market is likely to reverse direction. This graph shows very clearly both the downward and upward trends of the GDT index. GDT trading sessions are held twice a month. The „Global Dairy Trade“ trading floor is owned by the agricultural cooperative „Fonterra“. Trends in the Oceania area reach Europe in about 1.5-2 months.
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