GDT event 403: Bearish sentiment remains amid weak futures

Since the previous Global Dairy Trade (GDT) event, market sentiment has been broadly bearish, apart from milk powders. Event 403 may provide further direction, while international futures markets have recorded weak weekly performance, particularly in the US.Compared to the winning prices of the previous GDT auction, calculations based on SGX futures indicate a potential decline if GDT results align with futures outcomes under both the “all contracts” and “C2 contracts” methods.Key market insights:New Zealand milk production: March milk production increased by 9.76%, equivalent to an additional 172 million kilo. This compares to a 6.01% increase in February. Year-to-date (March) production stands at 6,344,000,000 kilo, representing a 5.50% increase.SGX dairy futures: Market sentiment for New Zealand dairy futures has weakened in recent weeks.Volumes and products: As the production season moves towards its end, offered volumes declined in this event, despite the inclusion of BMP at 568 tons. Total auction volume stands at 11,342 tons.Exports: March year-to-date exports increased by 3.55%, or 215 million kilo LME.Expected price impact: If Event 403 results align with SGX futures, the GDT price index could decline by 0.5% under both the “C2” method and the “all contracts” method.Composition of volumes: Whole Milk Powder (WMP) dominates the offerings in Event 403, accounting for 51.3% of total volume. Price movements in this segment will significantly influence overall market sentiment and the GDT index. Notably, WMP prices on the SGX futures market have mostly declined since the previous GDT event.Global outlook: Dairy futures on both the EEX and CME reflect weaker market sentiment.Futures development: Since the previous GDT event, average futures prices (C1–C6) have continued to trade above the average winning prices (AWPs) observed in Event 401, except for AMF and butter. AMF -5.25% SMP 2.51% Butter -8.14% WMP 3.08% Event 403 is characterized by a slightly bearish outlook based on current futures market signals. The strong increase in global milk production appears to have reduced the market firmness observed in recent weeks. Geopolitical developments, such as the conflict involving Iran and the closure of the Strait of Hormuz, may also motivate buyers to secure additional volumes in anticipation of potential price increases.