Tuesday, 12 January 2021 11:55

Dream start for dairy prices

Written by  Sudesh Kissun
Last week's GDT recorded solid gains for Whole Milk Powder (WMP). Last week's GDT recorded solid gains for Whole Milk Powder (WMP).

Dairy farmers can expect a lift in the forecast milk payout if dairy prices continue to climb.

Last week’s Global Dairy Trade (GDT) auction, the first for 2021, recorded solid gains in whole milk powder (WMP) and fat product prices, building on gains in the two December auctions.

WMP prices, used by Fonterra to set its payout, sit at a 12-month high of US$3306/metric tonne.

Last month, Fonterra narrowed its forecast payout range to $6.70-$7.30/kgMS. ASB lifted its forecast to $7/kgMS. ASB senior economist Chris Tennent-Brown notes that last week’s GDT price rise built on gains of December that led to the bank lifting its forecast price.

He says WMP prices have now edged comfortably ahead of where they were a year ago.

“The contract curve remains flat and stable, so price gains aren’t being driven by short-term supply fears,” he told Rural News.

“The latest GDT result provides a buffer to our $7 forecast, and more of the same over the coming events could well see Fonterra narrow its forecast range.”

Gains on GDT auctions over the past two months are being mostly attributed to strong demand from China.

While most countries are still dealing with waves of Covid-19, China’s economy is bouncing back after weathering the Covid storm.

Fonterra said last month that China was continuing to recover well from Covid-19 and this was reflected in recent GDT auctions.

The co-op noted a strong demand from Chinese buyers for WMP.

“The impact of Covid-19 continues to play out globally, and we continue to have a watchful eye on the increasing Northern Hemisphere milk production and New Zealand dollar,” said Fonterra chief executive Miles Hurrell.

“However, we have contracted a good proportion of our sales book for this time of the season, which has given us the confidence to narrow and lift the bottom end of the forecast farmgate milk price range.”

New Zealand milk production also impacts GDT prices; a drop in production can spark supply fears.

Data released in late December by the Dairy Companies Association of New Zealand (DCANZ) showed NZ November milk production was down 2.5% on a tonnage basis and down 2.7% on milksolids basis on November 2019.

More like this

$7.20/kgMS and scope for more

Strong global demand for dairy products has prompted ANZ to raise its forecast milk price for this season to $7.20/kgMS.

Featured

Merlo goes greener

Obviously not wishing to get left behind by some of its competitors, Italian manufacturer Merlo is planning to add to its green-liveried telehandler range- with another set of green credentials in the shape of an all-new, all-electric battery-powered Merlo e-Worker model.

 

Growing a family legacy

What started with planting some acacia trees 25 years ago has become a multi-generational passion for the Hunt family in Te Awamutu.

Moves to improve winter grazing requirements

DairyNZ says it supports recommendations to the Government from an advisory group looking to improve winter grazing rules for farmers and achieve better environmental outcomes.

National

Machinery & Products

Good growth year for Claas

While many sectors of the agricultural machinery were hit by the ravages of Covid-19, the effects of the pandemic did…

Green machine frugal on fuel

According to the industry respected independent DLG PowerMix test, John Deere appears to be the best choice of tractor for…

App takes pressure off

TRS Tyre & Wheel, owned by Trelleborg Wheel Systems, has introduced the TLC Plus App to the New Zealand market.

New MF 5S series arrives

Just before Christmas, Massey Ferguson quietly released details of the successor to its popular MF 5700S range in the shape…

» The RNG Weather Report

» Latest Print Issues Online

The Hound

Seriously?

Your old mate reckons the nomination of the New Zealand Dairy Industry Awards (NZDIA) management team as a finalists in…

Good riddance!

The Hound reckons 2021 is off to a rollicking start with news that professional whinger and anti-farming drone Martin Taylor…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter