The latest increase in globalDairyTrade prices last week was a positive shock (the weighted average product index rose by 13.5%). We have had a series of negative sales in response to a very big increase in supply from NZ and to a lesser extent Australia, Europe and the USA. It was inevitable that international dairy prices would fall in response.
But now NZ has sold most of the extra commodities produced last year and were selling reduced volumes. Some buyers obviously had bare cupboards as evidenced by the increases in August and September delivery prices.
And now futures prices have flicked up as shown in the following Agrifax graphic.
It is hard to predict what will happen with gDT prices in coming auctions but it does appear that the solid demand that Fonterra's CEO, Theo Spierings talks about, is there in spades.