Understanding GDT Auctions: How the Global Dairy Trade Platform Works and Its Impact on India

By Dairy Dimension Editorial Team
June 2025 | Global Markets | India Dairy Insight

🌍 What is GDT (Global Dairy Trade)?

Global Dairy Trade (GDT) is an international trading platform where buyers and sellers from around the world participate in bimonthly online auctions of dairy commodities such as:

• Skimmed Milk Powder (SMP)
• Whole Milk Powder (WMP)
• Butter and Anhydrous Milk Fat (AMF)
• Cheddar Cheese
• Lactose and MPC

Operated by GlobalDairyTrade Holdings, a wholly owned subsidiary of Fonterra (New Zealand), GDT plays a crucial role in benchmarking global dairy prices.

🛠️ How GDT Auctions Work

GDT auctions take place twice a month, with more than 500 registered bidders from more than 60 countries. Here’s a simplified flow:

1. Sellers List Products: Major global exporters, such as Fonterra, Arla, Dairy America, and Amul (for trial or observation), offer quantities of their dairy commodities.

2. Buyers Bid Online: A clock auction format is used, where prices tick up until demand drops to meet supply.

3. Price Discovery Happens: When the auction closes, a settlement price is reached for each commodity.

4. The GDT Index Is Published: This index, based on weighted average price movements, serves as a global reference for dairy pricing.

🎯 Key Features:

• Transparent: Real-time bidding and public price indices.
• Efficient: Market-based pricing aligned with global demand.
• Influential: Often treated as the global benchmark for dairy product pricing.

🇮🇳 Why GDT Matters to the Indian Dairy Industry

Although India is not a regular participant in GDT auctions as a seller or buyer, its influence is significant due to its price sensitivity in products such as SMP and butter.

📉 Price Benchmarking for SMP

• Indian SMP exports are heavily dependent on GDT trends.
  If GDT SMP prices rise, Indian SMP becomes competitive in export markets (e.g., Bangladesh, Middle East, Southeast Asia).
• Conversely, if GDT SMP prices fall, Indian exporters struggle to compete with subsidised or low-cost offerings from the EU or Oceania.

📈 Trade Policy Decisions

• GDT trends often inform government export incentives. For example:
  • MEIS/RODTEP adjustments
  • Export bans or support during oversupply (e.g., post-flush season)
• Between 2020 and 2022, India strategically released SMP into export channels when GDT prices exceeded $3,200 per metric ton.

🌐 Signals for Domestic Pricing

• Private dairies and cooperatives often track GDT for forecasting domestic milk procurement prices.
• Rising global butter or AMF prices can redirect Indian fat products for export, thereby tightening domestic supply and pushing up ghee and butter prices.

📊 Impact on Global Competitiveness

• Indian dairies aspiring to export often align their quality and production timelines to match the global demand cycles observed on the GDT.
• High-value ingredient makers (MPC, casein) are especially affected — when GDT prices rise, Indian players ramp up output for export arbitrage.

📉 Recent Trends and Implications

🧭 What Should Indian Stakeholders Do?

1. Monitor GDT Regularly

The government, exporters, cooperatives, and industry bodies should closely monitor price signals from the GDT to track export movements.

2. Strategic SMP Buffering

India should build intervention stocks when GDT is low and release them when global prices are favourable.

3. Participate in Auctions (Long Term)

While India is self-sufficient, large cooperatives like Amul or NDDB Dairy Services could explore pilot participation as sellers of strategic commodities such as casein or ghee.

4. Improve Data Infrastructure

Linking Indian auction mechanisms or eNAM-like platforms to global trends can boost price transparency and reduce volatility for Indian farmers.

📌 Conclusion

While India’s dairy sector is largely inward-focused, the ripple effects of GDT auctions are undeniable. In a world of increasing trade interdependence, tracking GDT is not optional — it’s essential. As India expands its global dairy footprint, understanding and leveraging GDT signals will be key to ensuring competitive exports, stable farmer incomes, and strategic policymaking.