The GlobalDairyTrade auction begins at 1200GMT

  • Analysts are expecting a bounce for prices this time around, citing improved prices in dairy futures markets
  • Also cite supply restrictions that have been induced (Fonterra reducing its offered volumes)
  • There is less certainty that a bounce tonight marks a turning point for the slump

The recent auction results:

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Rabobank New Zealand say dairy is experiencing a severe cyclical downturn, but they expect a "substantial" improvement in prices by mid-2016

  • the current price trough is part of an extended negative phase of the commodity cycle and not a structural, permanent change to supply and demand dynamics
  • 19% fall in prices over the course of two GDT auctions in July and August
  • Downturn exacerbated by developments including China slashing its purchases, Russia banning dairy imports from the EU, plus EU dairy quotas being removed in April this year
  • Dairy prices unlikely to be much improved over the next six months