You can’t stop volatility – GDT falls

Published 3 November 15

The Global Dairy Trade (GDT) auction price index fell 7.4% today (3 November) and highlights just how volatile the dairy markets are over the short term.

Using a 12-auction rolling average price to smooth the volatility suggests that the bottom of the market has been reached. Although a sustained recovery will only be achieved once we see a supply-end reaction. World milk production growth does now seem to be diminishing. NZ milk production fell back in September, while production growth in the US and Australia is slowing down.

A slowdown in milk production accompanied by low prices will pull buyers back to the market, although this is likely to take some time. In the meantime, volatility, especially in an auction, will remain.

GDT graph 03.11.15