Increase in global prices continues

International dairy product prices are continuing to increase. At the latest GlobalDairy Trade auction held on 6 December, prices increased by 3,5% on average compared to the previous sale on 15 November. The GlobalDairy Trade trade-weighted index now stands at 1 082, the highest level since June 2014, a 50% increase since January 2016.

Lower and negative production growth in major exporting countries in the southern hemisphere, slower than expected EU production growth and a slow recovery of the Chinese market, are the major factors that drive the increase in prices.

Higher global prices have already resulted in higher import prices in South Africa. This, combined with a weak rand, has resulted in higher import parity, making it less attractive to import products. Unfortunately, the lower producer prices combined with higher feed prices during the past two years have not encouraged higher local production.