Monday, 12 July 2021 07:55

$8 still on the cards

Written by  Sudesh Kissun
Despite a sixth consecutive drop in the GDT price index, analysts say an $8/kgMS payout is still on the cards. Despite a sixth consecutive drop in the GDT price index, analysts say an $8/kgMS payout is still on the cards.

Dairy prices continue to fall, but an $8/kgMS forecast milk price this season is still on the cards, say analysts.

Last week’s Global Dairy Trade (GDT) saw the sixth consecutive drop in the price index. But it’s the fourth consecutive drop in whole milk powder (WMP) price that will concern farmers.

ASB economist Nat Keall points out that WMP prices are holding onto most of their gains from earlier in the year and are still up about 20% on the same period last year

“We expect prices to drift lower over the remainder of the season, but the pace and size of the easing is a big question,” says Keall.

With global demand and supply still finely balance, he thinks a sharp price correction is unlikely.

Keall says while there are some downside risks to ASB’s forecast of $8.20/kgMS, prices remain very high.

“We still see the makings of a strong season despite the latest GDT result.

“Anecdotally, there are signs too that Fonterra is selling product off auction at healthy prices.”

 A weaker than expected New Zealand dollar may add some support to the farmgate milk price, says Keall.

The consecutive drop in dairy prices suggests prices are losing momentum.

Aggressive Chinese purchases fuelled the boom in dairy prices this year, as the country build ups its strategic stockpile in response to booming domestic consumption.

Keall says tighter global supply and widespread freight disruption have added fuel to the fire.

“But there are now signs Chinese inventory is getting closer to healthy levels, and global production (both in NZ and in the Northern Hemisphere) has lifted in response to the price signals,” he says.

More like this

How high will they go?

With dairy prices on the rise, how far can Fonterra go with its forecast milk price rises this season?

Another record milk price forecast!

A new record milk price for this season has been forecast as dairy products fetch higher on the back of strong demand and softening supply.


Luxton leaves a legacy

Former Agriculture Minister and DairyNZ chair John Luxton leaves behind a legacy and lifetime of achievement in the agriculture sector…

Machinery & Products

Vaderstad's new drill is Inspire(d)

Tillage, seeding and planting specialists Vaderstad has introduced its new Inspire product range – focused on the 12-metre seed drill…

JD's new 6Rs for 2022

With the upcoming market year 2022 (MY22) only a few weeks away, John Deere has released details of changes to…

New features on Case IH Optum

The latest Case IH Optum AFS Connect range features a new cab, interior and connectivity package designed to benefit both…

» The RNG Weather Report

» Latest Print Issues Online

The Hound

Fond farewell

OPINION: Your canine crusader would like to pay tribute and a fond farewell to former Agriculture Minister and Dairy NZ…

Front page!

OPINION: This old mutt reckons (un) social media is just an echo chamber of self-important, self-professed experts who lecture and…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter