Rabobank flags rising global dairy prices, warns of downside risks ahead
While global dairy commodity prices continue to climb in most key exporting countries, the second half of the year is expected to bring increased downside risks.
Whole milk powder price index was down 1.5% to US$3231/metric tonne.
Rabobank’s dairy analyst Emma Higgins says the drop in WMP price coincides with Fonterra revising upwards their production forecast for the full season to -2% (from -3% previously) to 1.5billion kgMS.
“Weather has improved for most parts around the country and in fact total New Zealand production for the season to date (March 2018) is only trailing marginally behind last season at just -0.3%.
“More generally, New Zealand product pricing tends to wane over the coming weeks as we move into our seasonal production hiatus and sentiment trails off as the focus shifts to the Northern Hemisphere.”
However, there still remains demand for fresh SMP and a late spring in the Northern Hemisphere delaying production has resulted in tighter fresh inventories.
“As such, we saw positive price support for SMP this morning, with a lift of 3.6% bringing the average SMP price just shy of the US$2000 mark.
“New Zealand product is still priced at a premium over European sourced SMP. And while demand for fresh is strong, old EU SMP stocks are seeing some clearing movement.”
Results
AMF index down 1.9%, average price US$6,032/MT
Butter index unchanged, average price US$5,647/MT
BMP index up 0.5%, average price US$1,990/MT
Ched index up 3.1%, average price US$4,024/MT
LAC index up 0.6%, average price US$616/MT
RenCas index down 10.5%, average price US$5,177/MT
SMP index up 3.6%, average price US$1,999/MT
WMP index down 1.5%, average price US$3,231/MT
