Prices rose by 2.4% at GlobalDairyTrade, their first gain in two months, and overcoming fears over soft demand from China, the top dairy importer.

The gains were led by skim and whole milk powders, both of which appreciated by 3.1%. For skim milk powder, this was the best performance since March. Anhydrous milk fat gained 2.7%.

However, the news was not all bullish, with prices of butter, cheddar and lactose declining, by 0.8%. 1.3% and 4.6% respectively.

And appreciation in the products which did gain was modest compared with the scope of recent declines. Neither of the milk powders, nor the GDT index, recouped even the ground lost in the previous auction.

Spreads widen

Other key results of the auction included:

– The quantity of product sold, at 28,980 tonnes, was down 4.7% year on year, and down one-third from the 42,966 tonnes sold at the same event in 2018 – which followed the record month for New Zealand milk production. (That is, the 271,080 tonnes produced in October 2018.)

This season, milk output in New Zealand, which supplies the bulk of product sold through GlobalDairyTrade, has been constrained by factors including weather extremes, labour shortages and elevated feed costs. Volumes for the first five months of 2022-23 fell to a five-year low.

– The premium of whole milk powder over skim milk powder widened to $340 per tonne, the highest in more than a year – although still below the trailing five-year average of $504 per tonne.

– The premium of anhydrous milk fat to butter widened to a one-year high of $882 per tonne.