GDT index rises 3% as milk powders gain and dairy fats fall
Whole milk powder prices advanced 5.9%, their strongest increase at a single auction this year. Skim milk powder gained 3.1%, taking its price to the highest level recorded on GDT since June 2022. Whole milk powder is a central product in New Zealand’s dairy exports.
Cheese prices also increased, with cheddar up 8.6% and mozzarella gaining 5.8%. Dairy fats moved in the opposite direction: butter declined 4.7%, while anhydrous milk fat fell 3.2%. The gains in powders and cheese outweighed the declines in fats in the overall auction index.
Rosalind Crickett, an NZX dairy insights analyst, said the auction outcome substantially surpassed expectations in both the physical dairy market and futures trading. Buyers from China purchased 59% of the volume sold. Farmers Weekly’s account identified strong East Asian bidding as the main driver of the powder increases and said Chinese purchases supported prices for medium-term delivery contracts.
The report linked weaker fat prices to increased butterfat availability among major exporters, including the European Union, the United States, Argentina and New Zealand. It described milk powder stocks as broadly aligned with firm import demand, whereas milkfat products were in relative surplus. It also assessed the overall effect on revenue per kilogram of milksolids as positive, given the weight of whole and skim milk powders in New Zealand’s production mix.
The auction rebound coincided with peak daily milk throughput during the southern hemisphere’s spring production flush. The report described this timing, together with a competitive New Zealand dollar against the US dollar, as an opportunity for processors and export co-operatives to secure forward prices. Its assessment concerned both commodity-price hedging and foreign-exchange arrangements.
According to the report, those hedging opportunities could help export co-operatives such as Fonterra translate stronger market prices into higher farmgate payout forecasts for the 2026/27 season. It suggested that securing those prices could improve cash-flow certainty for pasture-based dairy businesses heading into 2027.
