Fonterra's forecast milk price of $6.75/kgMS is looking shaky, bank economists agree.
Global dairy prices have ended a three-month positive run on Global Dairy Trade (GDT); the price index declining for the first time since March.
The GDT price index slipped 0.8% from the previous auction two weeks ago to US$3,434. Some 21,171 tonnes of product was sold, down from 22,004 tonnes at the previous auction.
Starting with the good news, Higgins says fat continue setting record prices.
Anhydrous Milk Fat (AMF) lifted 4.4% to US$6,885/tonne – GDT average price record – while butter gained by 2.9%, with the average price at US$5,768/tonne (again, another GDT record).
Lower milk production from Europe across the peak of the season and less fat stocks, coupled with continued strong demand for milk fats from developed markets, are underpinning these outstanding prices, she says.
On the flipside, cheese prices lost some ground, dropping 3.8% to sit at an average price of US$4,121 /tonne.
Higgins says Europe has been gearing up their cheese production as they work through the spring flush.
Whole milk powder (WMP) price dropped a modest 3.3% to US$3,022 /tonne. Higgins says the result is in line with its forecast.
“It’s not surprising given there is less fresh product available as we move into our seasonal hiatus here in New Zealand over the next couple months. However, we still expect to see increased buying from the Chinese as we move further into the second half of the year.’
Skim milk powder (SMP) moved up a fraction (1.4%) to US$2,218 /tonne. No SMP has been entered into European intervention stores for the third week in a row, providing price support for fresh SMP product.
AMF index up 4.4%, average price US$6,885/MT
Butter index up 2.9%, average price US$5,768/MT
BMP not offered
Ched index down 3.8%, average price US$4,121/MT
LAC index down 11.1%, average price US$869/MT
RenCas index down 8.0%, average price US$6,104/MT
SMP index up 1.4%, average price US$2,218/MT
WMP index down 3.3%, average price US$3,022/MT