Milk Prices on the Up

The global dairy market definitely appears to have turned a corner.  The latest Global Dairy Trade (GDT) auction on the 16^th August saw the index of prices climb 12.7%.  This is after a 6.6% rise at the 2^nd August auction.  Discounting a brief ‘bounce’ in prices that occurred in October 2015, prices are now at their highest levels seen since spring 2015.  Just as heartening are that this market rise is being achieved with relatively high volumes going through the auction.  The quantity traded at the most recent auction was 26% higher than the average seen over the past 12 months, and 9% higher than the same auction last year.  The increase in price is a combination of Asian buyers (including the Chinese) returning to the market, and Fonterra forecasting that supplies available through the auction are likely to be reduced in the next year.