For the first time in the last four Global Dairy Trade Events, the GDT has seen a decrease in value.
Down just 0.7%, the latest event saw Butter and Whole Milk Powder (WHP) prices also down, 1.6% and 2.7% respectively. Cheddar came out of the auction with the biggest price increase, up 4.5%, followed by Anhydrous Milk Fat (AMF) with a 3.1% increase and Skim Milk Powder (SMP) up 2.3%.
Dairy Market Specialist Stu Davison told REX host Dominic George that the overall price regression did not come as a major surprise but doesn't necessarily reflect a 'bad' result for Kiwi farmers.
"We were predicting a bit of a negative event this time around," he said.
"The surprise however in this one was Skim Milk Powder, managing to go positive, that one was expected to follow suit and go lower, so a good result hidden below that red overhead figure."
China purchased just under half the volume sold, influencing dairy market trends significantly, with Davison also noting the likelihood of a dry summer and the effect that has on buying trends.
"We've got lifting curves on both milk powders, so the buyers are well aware of the impact of a dry summer and the likely impact that means of price as well.
"The downside in terms of farmgate milk prices is that if we don't get the prices now, it starts to reduce the expectation of how high our milk prices can go."
When asked about the long-term implications of these trends, he indicated that while one auction doesn't tell the whole story, it's a reflection of the market's state.
"This one's a little bit supportive of prices today and where they are.
"So we did select state Whole Milk Powder as our sort of bellwether, which it is for New Zealand…it did fall back under that $3000 mark for the average so there's positivity there.
"Prices are reasonably well supported at the point they are now, we expect them to slowly move forward until the market really understands how bad milk production could be if we get a draught or an El Nino-impacted draught."
Having shifted from New Zealand to Chicago, Davison and George talked about the differences between the two countries as well as the similarities.
Listen to the full chat between Stu Davison and Dominic George above.