Tuesday, 12 November 2019 08:55

Skim milk no longer poor cousin in GDT

Written by  Pam Tipa
Skim milk powder price is on the rise. Skim milk powder price is on the rise.

Powders led the way for the 3.7% jump in the Global Dairy Trade last week with economists now looking at an upside to current milk price forecasts.

Skim milk powder (SMP) rose by 6.7% and whole milk powder (WMP) by 3.6% -- the latter to an average price of US$3254/tonne, says BNZ’s Doug Steel.

“Firming international prices and a relatively low NZ dollar continue to add support to milk prices in New Zealand,” he said. 

“While the dairy sector faces many challenges including environmental policy proposals, the price outlook is buoyant.”

Steel says market conditions suggest a 2019/20 milk price in the top half of Fonterra’s $6.55 to $7.55/kgMS range. 

ANZ’s Susan Kilsby told Dairy News their season forecast of $7.15/kgMS could go higher, and the bank’s forecast for next season is $7.50/kgMS.

Last week’s GDT rise was stronger than anticipated especially with milk powders, she says. 

SMP has been trading at a discount to WMP for years because of the build-up of stocks in Europe. While public stocks disappeared about a year ago it wasn’t clear how much was in the private sector. The quick rise in SMP price shows that those stocks have cleared.

 Rabobank’s Emma Higgins says while cheese and lactose average prices moved lower at last week’s GDT and butter pricing moved sideways, all other categories jumped.

Strong preference remains for New Zealand SMP, with its price  rising almost 7% to US$2924/t.  

Buyers are looking for cover as we move past seasonal peak and SMP offer volumes on GDT drop off considerably from next month.

 Demand has remained steady for New Zealand-origin WMP product across the course of the production season thus far and volumes on offer peaked at the last auction. 

Rabobank is holding its $7.15/kgMS forecast for this season but will review next month. 

Higgins says while travelling offshore recently she sensed that the market had anticipated the New Zealand spring to be more bullish than it was.  

“We could possibly see some upwards pressure on markets still to come given that some buyers have been very relaxed about procuring product – particularly SMP.”  

More like this

Good times return

Following several years of pain, farmers and growers are facing a decent upswing in commodity prices, say economists.

Low interest sustainability lending from Halter, banks

Dairy and beef farmers could be eligible for lower interest lending options for financing Halter on their farms, with ANZ, ASB and BNZ now offering a pathway to sustainability loans for New Zealand’s largest virtual fencing provider.

Record milk price!

A record farmgate milk price for Fonterra shareholders is all but confirmed for this season.

Featured

Dr Mike Joy says sorry, escapes censure

Academic Dr Mike Joy and his employer, Victoria University of Wellington have apologised for his comments suggesting that dairy industry CEOs should be hanged for contributing towards nitrate poisoning of waterways.

People-first philosophy pays off

The team meeting at the Culverden Hotel was relaxed and open, despite being in the middle of calving when stress levels are at peak levels, especially in bitterly cold and wet conditions like today.

Farmer anger over Joy's social media post

A comment by outspoken academic Dr Mike Joy suggesting that dairy industry leaders should be hanged for nitrate contamination of drinking/groundwater has enraged farmers.

National

Machinery & Products

JDLink Boost for NZ farms

Connectivity is widely recognised as one of the biggest challenges facing farmers, but it is now being overcome through the…

New generation Defender HD11

The all-new 2026 Can-Am Defender HD11 looks likely to raise the bar in the highly competitive side-by-side category.

» Latest Print Issues Online

Milking It

Buttery prize

OPINION: Westland Milk may have won the contract to supply butter to Costco NZ but Open Country Dairy is having…

Gene Bill rumours

OPINION: The Gene Technology Bill has divided the farming community with strong arguments on both the pros and cons of…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter