Monday, 07 May 2018 11:16

Demand triggers skim milk powder price rise

Written by 
Emma Higgins. Emma Higgins.

Whole milk powder prices were softer at last week’s GDT auction, taking the average price down 1.5% to US$3231/t and the overall price index down 1.1%, says Rabobank dairy analyst Emma Higgins.  

This coincides with Fonterra last week revising upwards its production forecast for the full season versus last season to -2% (from -3% previously) to 1.5billion kgMS.

While New Zealand product pricing now tends to wane as focus turns to the northern hemisphere, the late spring retains demand for fresh skim milk powder (SMP), says Higgins.

SMP lifted 3.6% last week and NZ product is still selling for more than European product.

ASB’s Nathan Penny says the WMP fall contrasted with its expectations. However the sharp move lower in the NZ dollar more than compensates for the fall. Since the last GDT auction the NZD versus USD has fallen about 4.5%. 

The net affect sees overall dairy auction prices about 3% higher in NZ dollar terms – the terms that matter for the farmgate milk price. 

Fonterra’s Global Dairy Update released last week says NZ dairy exports in February increased 4% (11,000t) on the same month last year. 

Growth was again driven by WMP and fluid and fresh dairy, up a combined 12% (16,000t) for the month, slightly offset by declines in cheese, lactose and AMF. 

Exports for the 12 months to February were flat on the previous comparable period, it said. 

Exports of fluid and fresh dairy and WMP --  both among the largest export categories, and up a combined 117,000t (7%) -- this was offset by declines in most other categories. – Pam Tipa

 

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GDT price jump surprises economists

The 2.7% jump in last week’s Global Dairy Trade overall price index – with a 3.6% bounce in whole milk powder – was a surprise, economists agree.

Forecasts steady as demand holds

Banks are mainly holding firm on their forecasts of $7/kgMS despite last week’s flat Global Dairy Trade result – a small decline of 0.4% in the overall price index.

$7 payout still on the cards

Economists are still sticking to a 2019/20 season forecast of around $7/kgMS despite the 3.8% drop in the Global Dairy Trade overall price index last week.

 
 

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