Farmgate prices rise as farmers rebuild confidence
Sheep and beef farmers are cautiously optimistic as farmgate prices continue to firm.
If so “we are likely to see record highs again in the comings months with butter prices and milk fat prices more generally,” Penny told Dairy News.
Butter prices have lifted 27% so far this year and are well ahead of the where they were this time last year. Butter prices are only 5% below the record levels set in September 2017.
“Those prices are going to be healthy for the next few months, even better than healthy -- record highs. We will definitely be keeping an eye on those butter prices in the next few (GDT) auctions.”
BNZ senior economist Doug Steel says prices were higher for all products at last week’s GDT auction.
“The 2.7% rise in the GDT Price Index was within our expectation range. This increase essentially offsets the cumulative four small declines over the past four auctions.
“A lower US$ and higher oil prices over recent weeks have been dairy price supportive. Demand seems firm.
“The 0.9% gain in wholemilk powder (WMP) prices (average prices now $US3311/t) looked like a disappointment to NZX futures pricing on the day, but this is still a reasonable result given Fonterra again lifted volumes (5%) above previous forecasts for this auction. WMP prices are tracking above RBNZ forecasts.
“Skimmilk powder (SMP) prices rose 3.6%, but prices remain generally weak at $US1913/t. The gain likely reflects recent poor weather in Europe, where milk production growth has slowed. We expect SMP to remain generally weak as EU production improves over coming months, stockpiles remain large and changes to EU intervention (tendering rather than minimum price) weigh.”
RaboResearch’s dairy analyst Emma Higgins says it was a positive result for dairy farmers overnight at last week’s GDT event.
Price support remains for New Zealand SMP, which is at a premium to most European sourced SMP offered.
“Wild weather has really impacted pasture growth this year in Europe and the spring flush is slow out of the starting blocks this season,” she says.
“Reports are that spring grass growth is trailing about a month behind, at least.
“Beast from the East and Storm Emma have left sodden pastures and a feed crisis in Ireland, which is turning to other European countries to buy in feed.
“This is another contributor to why we think there will be less milk production growth in Europe over the course of 2018 than anticipated earlier in the year.”
