Prices contradict negative expectations at the GDT event 408

GDT Event 408, the fourth auction of the 2026/27 milk season, recorded an increase of +1.5%. However, the actual Average Winning Price increased from $3,793 per ton in Event 407 to $3,815 per ton in Event 408, representing a gain of 0.58%.Since the previous GDT event, market indicators had been pointing to weaker market conditions. Despite these negative signals, Event 408 developed out of sync with market expectations. While the GDT auction posted a positive result, SGX futures for both the C2 and the all-contracts methodologies had been indicating declines of approximately -4.12%.New Zealand's offering volume remained unchanged from Event 407 at 24,632 tons.Year-to-date through June, New Zealand's milk production has increased by 5.37%, equivalent to an additional 468 million kilo. Total milk production now stands at 9.186 billion kilo.GDT Event 408 results PRICE INDEX DOWN +1,5%, AWP $ 3,815 NZ Supply BUTTER DOWN -0,6%, AWP $ 5,303 ↓ Butter Milk Powder UP +10,5%, awp $ 4,737 ↑ Cheddar DOWN -6,5%, AWP 3,586 ↓ SMP UP +2,8%, AWP $ 3,234 ↑ WMP UP +1,6%, AWP $ 3,486 ↑ European and US Supply Butter (Solarec) UP + 0,95%./ $ 4,750 (average price) ↑ Mozzarella UP +1,3% AWP $ 3.940 ↑ Lactose UP 2,0%/ AWP US $ 1,721 (Arla + Fonterra USA) ↑ SMP W-Europe, Arla, UP +1,22%, AWP $ 3,118 (average price) ↑ SMP W-Europe, DMK, N.S./ AWP N.S. ↔ SMP W-Europe, Solarec, UP +2,05%, AWP $ 3,233/mt (average price) ↑ SMP USA N.A. / AWP $ 3,264/mt ( Fonterra USA) ↔ WMP W-Europe, Solarec UP 5,95% . AWP $ 3.920 (average price) ↑ AMF increased by +1.1%, although the largest decline occurred in Contract 3. Interestingly, Contract 1 fell by -0.20%. The butterfat value in AMF is $6,437 per ton on a 100% fat basis.Butter declined by -0.6%. The butterfat value in Butter is $6,428 per ton on a 100% fat basis. The difference in butterfat value between Butter and AMF is now $9 per ton in favour of AMF. This is the first time this has occurred in a very long period.Cheddar fell by a substantial -6.5%, following a decline of -12.3% in the previous event.SMP increased by +2.8%, with the strongest gain recorded in Contract 4 at +5.90%.WMP increased by +1.60%, with the largest gain also occurring in Contract 4 at +1.90%.A significant spread was observed between front-month and later-dated contracts for AMF, SMP, and Butter. NZ front deferred Last vs front AMF 6520 6260 -3,99% BUTTER 5300 5362 1,17% CHEDDAR 3475 3668 5,55% SMP 3395 3275 -3,53% WMP 3465 3460 -0,14% European and US supplyAll non-New Zealand prices increased, except for products that were not offered during this event. On the day of the GDT auction, the CME spot call session saw US SMP settle at $3,293 per ton, a sharp decline from one month earlier, when it settled at $4.89 per ton (FOB basis).Although SGX had been signalling a decline that did not materialise during this week's GDT auction, the market responded with mixed movements in the days following the event. Most quotations declined, with the exceptions of WMP (Contracts 5 and 6), SMP (Contracts 3 to 6), and AMF (Contracts 1 and 4). WMP 09/07/2026 22/07/2026 ∆ ∆% July 3390 3417 27 0,80% Aug 3395 3460 65 1,91% Sept 3420 3500 80 2,34% Oct 3485 3560 75 2,15% Nov 3550 3610 60 1,69% Dec 3600 3635 35 0,97% SMP July 3135 3145 10 0,32% Aug 3150 3175 25 0,79% Sept 3150 3180 30 0,95% Oct 3215 3275 60 1,87% Nov 3240 3275 35 1,08% Dec 3280 3295 15 0,46% AMF July 6440 6590 150 2,33% Aug 5930 6090 160 2,70% Sept 5825 5910 85 1,46% Oct 5755 5935 180 3,13% Nov 5675 5855 180 3,17% Dec 5675 5855 180 3,17% BUTTER July 5470 5412 -58 -1,06% Aug 5180 5120 -60 -1,16% Sept 5050 5140 90 1,78% Oct 5070 5115 45 0,89% Nov 5070 5015 -55 -1,08% Dec 5105 5010 -95 -1,86% Average prices C1-C6 9/07/26 22/07/26 ∆ ∆% WMP $3.473 $3.530 $57 1,64% SMP $3.195 $3.224 $29 0,91% AMF $5.883 $6.039 $156 2,65% BUTTER $5.158 $5.135 -$22 -0,43% Overall, the mixed response on SGX does not reflect the positive outcome of GDT Event 408 but is more consistent with the current sentiment in the broader dairy market. At the halfway point of the calendar year, New Zealand is already ahead of the same period in 2025 by 468 million kilo of milk production.Following Event 408, Fonterra has continued the new season with a negative theoretical GDT revenue result. Up to and including Event 408, the current season has recorded a cumulative negative result of -1.69%, equivalent to approximately US$4.9 million below the revenue that would have been generated at the average prices achieved during the 2025/26 season.