Milk Glut Drags Fonterra Forecast Down to $9.20/kgMS
A milk glut around the world shows no sign of easing, putting downward pressure on farmgate milk prices for the next few months.
Whole milk powder prices, which slumped around 16% in the last two auctions, bounced back with a 3% rise to US$2855/tonne.
However, increased milk production in NZ and Europe is expected to push prices down in future auctions.
Westpac senior market strategist Imre Speizer says with a number of contracts hitting the lower price limit in the previous auction, it had expected to see some further downside in prices this auction.
“The result was also stronger than futures markets had anticipated (NZX futures had priced a 6% fall).
“While demand from China dipped a bit lower last night, demand overall was sufficient to absorb the 10% rise in whole milk powder on offer. However, with supply trends in both New Zealand and Europe improving, the market will continue to be challenged by rising supply in coming months.”
Key Results
AMF index up 3.0%, average price US$5,799/MT
Butter index up 4.9%, average price US$4,910/MT
BMP index not available, average price not available
Ched index down 1.0%, average price US$3,406/MT
LAC index down 2.7%, average price US$913/MT
RenCas index up 3.6%, average price US$5,927/MT
SMP index down 10.1%, average price US$1,948/MT
WMP index up 2.9%, average price US$2,855/MT
