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.
Global dairy prices recorded a slight lift in the overnight Global Dairy Trade (GDT) auction.
US-based RaboResearch dairy analyst Tom Bailey says the increase in the latest GDT does not come as a total surprise as the economy begins reopening and government support mechanisms take effect, spurring demand and helping to balance out the market.
The GDT price index rose 1% compared to the previous event.
Last night’s auction also saw North Asian and Southeast Asian demand (which accounts for nearly three-quarters of total volumes) remain relatively flat compared to the last event. Buyers from the Middle East and Africa, and Latin America all had increases, to the tune of 20-50%. North American buyers were absent and European demand declined significantly, reflective of the oversupply of SMP rapidly developing in both markets.
Whole milk prices slipped 0.5%.
Bailey says with over 10,000 MT on offer, it demonstrates that global demand for New Zealand WMP remains stable.
Cheese prices meanwhile slipped by 6%, a reasonable move given cheese has been one of the hardest-hit dairy commodities due to the closure of so many foodservice restaurants throughout the coronavirus lockdowns.
Lactose demand had the greatest uptick in price 15.6% to $1,341MT, the highest price since 2014.
Bailey says give lactose’s wide array of applications, it is difficult to pin down an underlying driver, but given that it is a key ingredient in IMF as well as pharmaceutical uses it is reasonable to assume that concerns around food security may be driving its price support.
Key results
AMF index up 2.7%, average price US$4,079/MT
Butter index down 1.9%, average price US$3,803/MT
BMP not offered
Ched index down 6.0%, average price US$3,864/MT
LAC index up 15.6%, average price US$1,341/MT
RenCas index down 1.9%, average price US$8,719/MT
SMP index up 6.7%, average price US$2,549/MT
WMP index down 0.5%, average price US$2,677/MT
'Common sense' cuts to government red tape will make it easier for New Zealand to deliver safe food to more markets.
Balclutha farmer Renae Martin remembers the moment she fell in love with cows.
Academic freedom is a privilege and it's put at risk when people abuse it.
All eyes are on milk production in New Zealand and its impact on global dairy prices in the coming months.
Claims that some Southland farmers were invoiced up to $4000 for winter grazing compliance checks despite not breaching rules are being rejected by Environment Southland.
According to the most recent Rabobank Rural Confidence Survey, farmer confidence has inched higher, reaching its second highest reading in the last decade.