First GDT sets the tone for 2023

Today was the first GDT of the year, and it seems it is setting the tone for 2023. With an overall minus of 2.8% it is not the biggest decline we have seen over the last months, but looking at the details it isn't painting a bright picture for the dairy market in the near future. 

Skimmed Milk Powder showed a minus of 4.3% and especially the price of the EU Arla products set a new low. At € 2570 it seems the SMP market did not find a floor yet and is on its way toward € 2500,-.  But the biggest indication that demand (especially is SE Asia) isn't great is the decline of BMP of 12.9%. 

Looking at WMP the decline was modest but AMF and butter also traded 5.1% and 2.8% lower. NZ butter is now trading at around € 4250,- making it the cheapest butter available on export destinations.

We did not expect such a correction as the milk collection in Australia and NZ isn't great and we would have thought this would put a break on the downtrend. But the decline in demand seems to be bigger than te decline in supply keeping the supply and demand balance in favour of supply, pushing prices again lower.

Some might argue that the buying volumes compared to a year ago are up, so demand seems to be pretty good. Other might argue that offered volumes are up, and people are willing to pay a lot for goods they don't necessarily need. They only buy so if the price moves up over the months to come, they can stay away from the market again.