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 price index rose 3.2% compared to the previous auction; a strong demand for fat products saw big rise butter and anhydrous milk fat prices.
Surprisingly, the price for Fonterra’s flagship product, whole milk powder- rose 1.3% over the previous auction, despite the market forecasting a 2% drop. WMP price index now sits at US$3312/tonne.
Westpac senior market strategist Imre Speizer says the rise in GDT price index was led by fat products (butter up 11.2%).
“WMP was more subdued, up 1.3% which was slightly above futures prices which implied a 2% fall. The positive outturn has implications for analysts’ forecasts of the milk payout for the next season (2017-18),” he says.
Key Results
AMF index up 8.2%, average price US$6,631/MT
Butter index up 11.2%, average price US$5,479/MT
BMP index up 7.0%, average price US$1,980/MT
Ched index up 0.6%, average price US$3,726/MT
LAC index up 2.0%, average price US$967/MT
RenCas index down 3.7%, average price US$6,259/MT
SMP index up 1.0%, average price US$1,998/MT
WMP index up 1.3%, average price US$3,312/MT
