Global dairy markets took a bit of a wobble this week, with news that the Global Dairy Trade (GDT) auction dropped in value by 4.1%.

It’s a sizeable drop and comes on the back of price drops at the previous three auctions.

The biggest drop in price was recorded for whole milk powder (WMP), which accounts for more than half of all product sold on the exchange. It dropped by 5.1% at Tuesday’s auction, which is the biggest single drop in the price of WMP since exactly 12 months ago.

We can expect Fonterra to announce a drop in forecasted milk price for the current season on the back of this drop.

There was a drop too for the price of skim milk powder (SMP), which fell by 1.7%, while butter dropped in price by 4.3% and anhydrous milk fat dropped by 4.2%.

It’s not carnage, but it’s not good news either and highlights a real softening in the trade, which, to be fair, has been flagged by some commentators as a threat for some time.

Thankfully, there was a lot more stability in European trading this week, with the biggest price drop being a €90/t or 1.2% price drop for butter. Other commodities such as WMP and cheddar cheese only dropped marginally by €5/t. SMP did take a bit of a bigger hit, dropping in price by €15/t.

Milk production in France is up 2.1% for May supplies as weather has been good all season, but warmer temperatures across much of Europe this week might be the start of a slowdown in EU supply growth.