Upturn in GDT auction result

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This week saw a 14.8% increase in the prices paid at the Fonterra Global Dairy Trade (GDT) auction.

Commenting on the result, Danske Bank’s Head of Agricultural Relations John Henning said that one swallow does not make a summer.

“However, I welcome the improvement at the GDT event. After ten consecutive falls, this is the first positive result since 3rd March 2015.”

He added: “A positive auction had been expected by industry commentators and it is pleasing to note that all commodities sold registered price increases apart from lactose and butter milk powder.

“This positive auction result is a step, albeit a small step, in the right direction for the dairy industry especially in Northern Ireland where the sector is very exposed to global dairy markets.”

But Henning pointed to the reality that farmgate milk prices will remain under pressure until global dairy markets stabilise, with most analysts suggesting that any real recovery is unlikely before 2016.

“With milk price largely outside farmers’ control the focus should remain on controlling costs/improving efficiency within the farm gate to help deal with global price volatility at the present time and indeed in the future,” he said.

“In recent weeks many meetings, protests and summits have been organised and whilst time will judge the extent to which these have been helpful the necessity of dealing with price volatility at farm level remains critical - coping when prices are low and preparing for low prices when prices are high.

“At Danske Bank we continue to work with our dairy farming customers, as we have done for generations, and recognise that farming is a long term industry which increasingly operates in a global environment.

“And we also recognise that other farming sectors are being impacted by lower commodity prices which perhaps haven’t made news headlines in recent weeks but are nevertheless causing real challenges for many farmers.

“We continue to engage with many industry stakeholders and also encourage farmers to talk to their bank regularly.”

The latest auction showed a 14.8% increase in the overall GDT Price Index. Increases were seen across all products except butter milk powder and lactose.