HighGround Dairy – GDT Analysis

Even a slight increase in Fonterra’s 12 month GDT volume forecast did not put the brakes on buyers’ interest to own physical product as the GDT Price Index ticked higher during this week’s auction. We continue to be impressed with the forward curve on most of GDT’s commodities. They remain at extremely high levels and are fairly flat over the next six months. For now, buyers do not seem concerned by 4-5% milk production growth in New Zealand nor positive growth anticipated in the US and EU over the next year. Buyers’ actions at GDT are loud and clear: Global demand for dairy products remains firm. Total quantity sold at the auction has declined for the third straight event, now down 23% from the peak on 6 Aug of 60,587MT to 46,664MT at yesterday’s event. Fonterra issued a release on Monday explaining that the volume reduction has “been driven by strong demand from our customers buying outside of GDT for more value-add products and services.” To view the release in its entirety, click here.