GDT Event 398: Bearish signals deriving from rising milk supply

Since the previous Global Dairy Trade (GDT) event, market sentiment has turned more bearish, which is not surprising given the current increase in global milk production. Event 398 may provide further direction, although international futures markets recorded mostly declines over the past week.Key market insightsNew Zealand milk production: Year-to-date production through December is up 1.85%, equivalent to an increase of 398 million kilo.SGX dairy futures: Market sentiment for New Zealand dairy futures has generally weakened over the past week, except for Butter and AMF. However, based on the C2 method, the average prices of all commodities increased compared with the Event 397 winning prices. Under the All contracts method, only AMF moved lower.Volumes & products: With the new season underway, offered volumes remain substantial but declined compared with GDT Event 397. Total auction volume for Event 398 amounts to 19,184 tons, down 3.07% from the previous event. The decline is mainly attributable to the presence of BMP in today’s auction.Exports: Year-to-date exports through December 2025 are up 0.35%, equivalent to 72 million kilo LME.Expected price impact: If Event 398 results align with SGX Futures, the GDT price index could decrease by 0.25% under the C2 method but increase by 3.75% under the All contracts method.Composition of volumes: Whole Milk Powder (WMP) dominates the offerings in Event 398, accounting for 56.6% of total volume. Price movements in WMP will therefore have a significant impact on overall market sentiment and the index outcome.Global outlook: Dairy futures in the US and the EU have followed a mixed trajectory, while SGX recorded some upward movement in recent trading days, except for WMP.Futures development: Since the last GDT event, average futures (C1–C6) have moved higher compared with the Auction Weighted Prices (AWPs) of Event 396, except for AMF. AMF -0.44% SMP 8.59% Butter 7.79% WMP 2.70% Overall, Event 398 presents a bearish-to-mixed outlook based on developments in the futures markets, although the strong increase in global milk production may limit the likelihood of a bullish outcome.