Increase in the supply of milk imposes new global market falls

International prices of powdered milk in the auction of the Global Dairy Trade platform (GDT) returned, since mid-October, most of the gains recorded in the four previous trading sessions. At the last auction held fortnightly on Tuesday, the full milk powder prices fell 11% to $ 2148 per tonne. Already the price of skimmed-milk powder had 8.1% fall, retreating to $ 1851 per tonne.
At the auction of the day on October 6, the whole milk had reached an average value of $ 2824 per tonne, while the skimmed-milk powder was $ 2267, according to data released by the platform. The prices negotiated in these auctions are reference to the dairy market. The supply reduction in the auctions announced by New Zealand Fonterra, the world's largest dairy exporter, has made prices recover in trading sessions from August, after they reached historic lows. The company decreased the volumes offered in the auction, but sold in the market. The effect of the strategy, however, lost strength in recent auctions.
According to Valter Galan, MilkPoint analyst, consulting firm specializing in dairy products, "the fundamentals of the market have not changed in relation to the period of high. So, the falls of the last three trading sessions seem to have been an adjustment after high strong, who had "characteristics of speculation".
He notes that milk production continues to be in the United States and also in Europe, where the end of the quota regime encourages this scenario. In New Zealand, the production builds up 3% drop in harvest (June to September). But this setback is not enough to offset increases in production as the main world importer of dairy products, China, still out of the market, explains.
Another factor is the high stocks of bassist skimmed-milk powder in Europe and the United States, according to Galan.
Rafael Ribeiro, Scot Consultoria, also estimates that the period of increased milk supply in the international market explains the reduction in prices. "There was a fit with the supply reduction by Fonterra, but demand remains weak. [The decline] It was not enough to sustain the international prices, "he says.
The frame is also pressed the producer price in the Brazilian market. The reason is that after a delay at the entrance of the crop of Minas Gerais and Goiás, due to the dry climate, the volumes began to grow. The demand is also weak. According to data from Kantar, cited by Galan, from January to September the long-life milk consumption fell 4% in comparison with the same period in 2014.