increase font size
Demand for dairy in China is increasing.
Global dairy prices are settling down after a rollercoaster ride triggered by the COVID-19 pandemic.
Last week’s Global Dairy Trade (GDT) auction saw the price index rise 0.1%, a slightly better outcome than expected by markets. This followed a 1% rise in the previous auction. Whole milk powder price rose 2.1% with increased demand from China.
At last week’s auction, whole milk powder fetched US$2,761/MT – still 5% below the year’s peak in January and 9% below the average of the past three years ($3,040).
While analysts believe these are early days, the positive GDT result signals that the worst may be over for some key markets.
However, Northern Hemisphere production and a high NZ dollar could affect the milk payout for NZ farmers.
Westpac’s senior market strategist Imre Speizer says it’s hard to infer too much from just one auction.
He says the result is consistent with the rebound in economic activity seen in many countries since the contraction in April.
“Activity levels remain extremely weak, but possibly past the worst,” he says.
Westpac is forecasting a 2020-21 farmgate milk price of $6.30/kgMS.
Speizer notes that the futures market is broadly in agreement, pricing it at $6.20/kgMS currently, slightly more upbeat than the $6.13 two weeks ago and $5.93/kgMS at the end of April.
Last month Fonterra announced an opening forecast range of $5.40-$6.90/kgMS.
ASB is more optimistic and has an opening forecast of $6.50/kgMS. Senior economist Chris Tennent-Brown notes that this is towards the top end of Fonterra’s range.
While any lift in whole milk powder prices is encouraging, over recent weeks the stronger NZ dollar is an offsetting negative, he says.
It was noteworthy that North Asian share (a proxy for China demand) rebounded at last week’s auction to a level slightly above average for the past 12 months.
RaboResearch dairy analyst Tom Bailey notes that conditions in China generally continue to improve economically, which typically leads to increased demand for dairy.
However, Rabobank estimates that significant domestic stockpiles of milk powder remain in China due to spray drying in February, resulting from supply chain constraints in processing fresh dairy products at the time.
Bailey says these stocks will likely pose a demand risk for imported powders later in the year.
He also noted that demand for whole milk powder was up as markets reopen and supply chains are refilled.
However, while distributors might be refilling their pipelines, true consumer-level demand remains opaque around the globe.
One of the most galling aspects of the tariffs whacked on our farm exports to the US is the fact that, now more than ever, US farmers are being propped up by government welfare – a direct result of Trump’s hardline on its trading partners.
China looks set to play a key role in helping the New Zealand wool sector shift away from trading as a commodity supplier.
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.
OPINION: The previous government spent too much during the Covid-19 pandemic, despite warnings from officials, according to a briefing released by the Treasury.
If you find a new consumer in a developed wine market, you are taking them from someone else, says Blank Canvas co-founder Sophie Parker-Thomson MW.
With the current situation in the European farm machinery market being described as difficult at best, it’s perhaps no surprise that the upcoming AgriSIMA 2026 agricultural machinery exhibition, scheduled for February 2026 at Paris-Nord Villepinte, has been cancelled.
The Meat Industry Association of New Zealand (MIA) has launched the first in-market activation of the refreshed Taste Pure Nature country-of-origin brand with an exclusive pop-up restaurant experience in Shanghai.
Jayna Wadsworth, daughter of the late New Zealand wicketkeeper Ken Wadsworth, has launched an auction of cricket memorabilia to raise funds for I Am Hope's youth mental health work.
As we move into the 2025/26 growing season, the Tractor and Machinery Association (TAMA) reports that the third quarter results for the year to date is showing that the stagnated tractor market of the last 18 months is showing signs of recovery.
DairyNZ chair Tracy Brown is urging dairy farmers to participate in the 2026 Levy vote, to be held early next year.
Beef + Lamb New Zealand (B+LNZ) is calling for nominations for director roles in the Eastern North Island and Southern South Island electoral districts.
OPINION: Microplastics are turning up just about everywhere in the global food supply, including in fish, cups of tea, and…
OPINION: At a time when dairy prices are at record highs, no one was expecting the world's second largest dairy…
