$8 final milk price likely
An $8/kgMS farm gate milk price is still on the cards with less than six weeks left to run this season.
The run of eight consecutive falls in the Global Dairy Trade price index has finally ended.
Last week’s GDT auction price index recorded a 0.3% lift. Prices remain around 13% lower than the recent peak in March, but 27% up on year ago levels.
However, the benchmark whole milk powder (WMP) price slid 1.5% and is now down 18% over the last seven auctions on the back of strong milk production in New Zealand.
Other prices fared better. Butter prices jumped 4%, while skim milk powder (SMP) and anhydrous milk fat (AMF) prices both recorded gains of more than 1%.
Westpac senior agri economist Nathan Penny says the result was in line with expectations.
For the second consecutive auction, global dairy prices have continued to reflect recent divergent trends, he notes.
With New Zealand the dominant global WMP exporter, WMP prices remain under pressure, reflecting the ongoing effects of record high production in the New Zealand autumn.
“New Zealand production jumped a whopping 10% over the autumn months compared to autumn 2020, with production also setting a record high for the season as a whole,” says Penny.
By contrast, SMP and cream (butter and AMF) prices have moved in the opposite direction, firming over the last two auctions.
“This firming may reflect dry weather in Europe and, in turn, softer recent European production. In the short term and with stable global dairy demand, we expect the fortunes of New Zealand and European production will drive WMP, and SMP and cream prices, respectively,” Penny adds.
“For WMP, the strength or otherwise ofNew Zealand spring production will begin to provide fresh impetus for prices in either direction, with official spring production data first becoming available in mid to late October.”
ASB economist Nat Keall agrees that the NZ spring will be the real test for prices as we enter the peak production months.
“Now that we are entering the peak months, the strength of NZ production will only grow in importance as a swing factor and could drive a bit of further volatility.”
NZ’s recent move to Covid alert level 4 adds a bit of uncertainty into this environment, particularly if prolonged.
The 2023-24 season has been a roller coaster ride for Waikato dairy farmers, according to Federated Farmers dairy section chair, Mathew Zonderop.
Ministry for Primary Industries (MPI) director general Ray Smith says job cuts announced this morning will not impact the way the Ministry is organised or merge business units.
Scales Corporation is acquiring a number of orchard assets from Bostock Group.
Family and solidarity shone through at the 75 years of Ferdon sale in Otorohanga last month.
The Ministry for Primary Industries (MPI) has informed staff it will cut 391 jobs following a consultation period.
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