GDT overnight prices are down 1%, with most prices generally at the lowest level seen in a while and the overall GDT index itself hasn't been at this level since 2020.
NZX Economist Amy Castleton told REX Today host Dominic George that while the GDT hasn't been this low in the past few years, in the long term prices are still relatively high.
"While prices are lower than we have seen for a couple of years, they're not that low by historical standards," she said.
There are no real changes in drivers for the market, but Castleton said there are a few signals, particularly in the Northern Hemisphere, that supply is starting to come back a bit, but the effects of this are not showing up in data just yet.
"Just the usual terrible weather and expenses. Europe is struggling with the same environmental regulations that New Zealand is, all of those kinds of things"
She also noted that demand is not massive because there is not much need for product in the Northern Hemisphere in particular.
"They've (consumers) got enough, they'll buy what they need and that will probably continue on for a few months until we've got some kind of sense of what New Zealand production is going to do for the season."
South East Asia is again leading the way when it comes to buying at GDT events, which Castleton said has been going on for a while now.
Although North Asia, which includes China, is still buying, they don't buy more than they need, whereas South East Asia is a lot more price sensitive and won't push prices if they don't need to.
"They will buy what they need at the price they like and then wait for prices to come down a bit before they come down for a bit more product."
In terms of supply, Castleton told George there is enough product available at the moment but certainly not a lot to go around.
She said whole Milk powder production in particular is probably a bit short in New Zealand, as most dairy companies have sold up the majority of their inventory they had.
Buyers aren't stressing however, she added, as it's not uncommon for production to decrease during this time of year.
Castleton believes there is nothing to drive the market significantly either up or down and expects it to continue to soften over time based on current metrics and historical data.
Listen to the full chat between NZX Economist Amy Castleton and Dominic George above.