When will global milk production hit a tipping point?
With global milk prices falling, the question is when will key exporting countries reach a tipping point where production starts to dip.
Westpac markets strategist Imre Speizer says the futures market for 2019-20 farmgate milk price remains stuck at $7.20/kg, where it has been since early February.
Speizer notes that this unsurprising given 80% of the season’s production volumes, as well as most sales, are known.
“That is in line with our own forecast for this season of $7.20,” he says.
Rabobank analyst Emma Higgins anticipates a milk price $7.35/kgMS, a decline of 35c.
Last week Fonterra reaffirmed its milk price range of $7 to $7.60/kgMS.
For the 2020/21 milk price, futures are predicting a price of $6.20/kgMS, from a pre-virus peak of $7.30 in January.
Both Westpac and Rabobank are reviewing their 2020-21 forecast prices and will report in the coming weeks.
