The stage is set for another rise in Fonterra’s forecast milk payout following a fifth straight jump in Global Dairy Trade (GDT) prices.
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.
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