Skim milk powder (SMP) physical prices lost 38% of their value over the last nine months of 2022, from the peak achieved in March, breaking back below the US$3,000/t mark by the end of Q4.
SMP prices remain under pressure from the surge of unanticipated EU SMP production.
NZ exports of SMP continue to track above the year prior, as stream returns continue to dictate that the SMP + MilkFats stream is the most valuable.
Whole Milk Powder (WMP) prices have eased 33% since prices peaked in March 2022, falling back below the US$3,250/t mark by the end of 2022.
Milk fat values are better positioned that milk powders at the end of 2022, with butter prices easing 37% from their March peak, while AMF prices are currently only 24% lower than their peak.
Butter prices have lost more value during Q4 than AMF prices, with buyers moving to the pure milk fat option as consumers change their buying habits as inflation pressures arise.
Stuart Davison says a result of the current expectations that some of the world's economies are likely to be in recession at some point during 2023, buyers of dairy commodities are very hesitant to be overbought with the prospect of demand easing further.
"This hand-to-mouth buying habit is unlikely to change in the first half of 2023."
