After two sessions of positive price news, dairy prices retreated 1.4% on the GlobalDairy Trade auction this week in New Zealand. The weighted average price of the eight commodities offered fell to $2,203 per metric ton yesterday. Skim milk powder dropped 3.6% to 76¢/lb., just a penny above U.S. SMP prices. Whole milk powder did bump up 0.7% to $2,176/ton. But for a full recovery to occur, whole milk powder will have to climb to $3,000, says Marc Beck, with the U.S. Dairy Export Council. That likely won’t happen until, and if, oil prices recover because there’s a better than 80% correlation between whole milk powder prices and oil. To get to $3,000 whole milk powder, oil prices would have to trade at $65/barrel. Oil is currently trading in the mid $40s. Butter was down 5.5% to $1.18/lb on yesterday’s GTD trade, still way below the U.S. price of $2.00. The only good news is that cheddar cheese increased 1.8%, to $1.24/lb. But that’s still about 10% less the U.S. cheese prices, making U.S. cheddar uncompetitive on world markets. The 20,616 metric tons traded was the lowest volume in three years.