Another drop in the GDT price index

The overall GDT price index fell by 5% at the latest auction on 2 August, following the general downward trend we've seen since mid-March. Drops in average prices for WMP (-6.1%) and SMP (-5.3%) were at the root of the overall decline, with these two products making up the bulk of product offered at the auction.

Higher product availability will have contributed to the overall decline, and with the southern hemisphere peak approaching, buyers will not have been inclined to bid up prices. The steady weakening of prices at the auction over the past few months may also indicate a general fall-off in demand from key Asian markets.

However, with global milk supplies expected to be tight in the upcoming year, most analysts expect prices to remain supported. How much support will remain will depend on the relative balance between higher supplies coming out of the southern hemisphere flush and the level of China's import demand for the remainder of the year.