Strong production, tested demand send milk prices crashing
Strong global milk production and rebalancing of demand among key buyers has delivered one of the biggest drops in whole milk powder prices in recent years.
The GDT auction last week was close to expectations, and even included a slightly positive surprise with a 5.5% jump in skim milk powder prices, says BNZ senior economist Doug Steel.
Overall dairy prices eased 0.6%.
“This was close to expectations,” Steel told Dairy News. “If anything, the decline was not quite as big as the indicators intimated. The GDT Price Index is up 12.2% year-to-date and 9.8% on a year ago.”
Whole milk powder (WMP) prices fell 0.8%, to an average price of $US3232/t.
BNZ is now forecasting a $6.30/kgMS milk price for the 2017-18 season, but Steel says something like $6.40 or $6.50/kgMS is easily within the realms of possibility.
“Ultimately, the final figure will depend on what effective exchange rate Fonterra has managed to achieve.
“Fonterra is due to provide its half year update later this month, where the co-op will provide its latest guidance for milk price (which sits at $6.40/kgMS) as well as for earnings and dividend.”
With the focus shifting to the next season, Steel says the general view is that dairy prices will ease later in 2018. This is based on expanding supply, particularly out of the EU, and the influence from the EU intervention programme.
“However, there are a few global weather issues now challenging this thinking, including cold weather across parts of Europe [that could materially restrict near term production],” he says.
“Drought in Argentina and dry in parts of the US that, combined, have seen grain prices push higher over recent weeks are also worth watching.
NZPork has appointed Auckland-based Paul Bucknell as its new chair.
The Government claims to have delivered on its election promise to protect productive farmland from emissions trading scheme (ETS) but red meat farmers aren’t happy.
Foot and Mouth Disease outbreaks could have a detrimental impact on any country's rural sector, as seen in the United Kingdom's 2000 outbreak that saw the compulsory slaughter of over six million animals.
The Ministry for the Environment is joining as a national award sponsor in the Ballance Farm Environment Awards (BFEA from next year).
Kiwis are wasting less of their food than they were two years ago, and this has been enough to push New Zealand’s total household food waste bill lower, the 2025 Rabobank KiwiHarvest Food Waste survey has found.
OPINION: Sir Lockwood Smith has clearly and succinctly defined what academic freedom is all about, the boundaries around it and the responsibility that goes with this privilege.
OPINION: Should cows in NZ be microchipped?
OPINION: Legislation being drafted to bring back the controversial trade of live animal exports by sea is getting stuck in the…