Rabobank flags rising global dairy prices, warns of downside risks ahead
While global dairy commodity prices continue to climb in most key exporting countries, the second half of the year is expected to bring increased downside risks.
Whole milk powder, butter and cheese prices were the big drivers of the eighth bounce in a row for the Global Dairy Trade (GDT) last week, says Emma Higgins, Rabobank dairy analyst.
The overall price index was up 1.9%.
Positive results for farmgate milk price purposes included butter pushing past the US$5000/tonne mark in a 9.3% lift to US$5089/t, a price not seen since mid 2018, says Higgins.
Whole milk powder (WMP) nudged up a healthy 4% to US$3317/t.
“Underpinning price increases lies the risk to milk collections over the tail of the season,” she told Dairy News.
“Fonterra has pulled back its forecast milk collections for the 2018-19 season for the second time in recent weeks as dry conditions take hold, particularly in pockets of the north.
“Buyers will be looking to procure volumes before production tails off and the seasonal hiatus takes place until next season.”
Skim milk powder (SMP) was down 2.4% to US$2405/t.
“The market is now digesting EU intervention stocks, sold on paper and now moving physically through the supply chain.”
While favourable weather in Europe has been reported in the first few weeks of spring, Higgins says buyer focus will remain on New Zealand over the next couple of GDT events, before attention turns sharply to the northern hemisphere spring peak.
BNZ senior economist Doug Steel says the GDT has made a cumulative 26.2% gain since November last year.
“To us, the overall price increase reflects generally tight global milk supply and solid demand (the number of unsatisfied bidders remains elevated),” Steel says.
“This result will again have forecasters discussing upside [prospects for] milk price forecasts. On our calculations, if current conditions persist a milk price in the top half of Fonterra’s $6.30/kgMS to $6.60/kgMS range is likely.
“Current global prices also set up a better milk price for next season, although we would be a little wary of extrapolating current product price strength right across next season as a whole.”
OPINION: Ministry for Primary Industries' situation outlook for primary industries report (SOPI) makes impressive reading.
Sheep and beef farmers Matt and Kristin Churchward say using artificial intelligence (AI) to spread fertiliser on their sprawling 630ha farm is a game changer for their business.
Commercial fruit and vegetable growers are being encouraged to cast their votes in the Horticulture New Zealand (HortNZ) board directors' election.
A unique discovery by a Palmerston North science company, Biolumic, looks set to revolutionise the value and potential of ryegrass and the secret is the application of ultraviolet (UV) light.
A New Zealand company is redefining the global collagen game by turning New Zealand sheepskin into a world-class health product.
With further extreme weather on the way, ANZ Bank is encouraging farmers and business owners impacted by the recent extreme weather and flooding to seek support if they need it.
OPINION: It's official, Fieldays 2025 clocked 110,000 visitors over the four days.
OPINION: The Federated Farmers rural advocacy hub at Fieldays has been touted as a great success.