International dairy prices mixed

Oceania milk powder prices have continued to come under some downward pressure in US dollar terms, while the butter and cheddar prices remained firm.

Whole milk powder prices were in Australia and NZ were down to US$2800/tonne over the last 2 weeks. This reflected the market trend at last gDT event on July 17. But whole milk powder stocks are low at present as milk and powder production run seasonally low. This may act to limit further downward price pressure in the short term.

Skim Milk powder prices moved lower by 3% to also average US$2800/tonne. This was counter to the gDT event where prices firmed. Sales activity is generally light given that limited stocks have been committed through previous contract negotiations and manufacturers seem to be holding off a little as they see how the production season develops. But overall exporters are happy with how order books are filling up.

At the July 17 g/DT event cheddar, rennet casein and whole milk powder price averages were down while anhydrous milk fat, buttermilk powder and milk protein concentrate all moved higher.

The new milk production season has begun NZ and Australia and milk output remains seasonally low. Winter conditions have been good overall and farmers are optimistic about achieving another above average production season. Pasture utilization and herd condition are both running above average in general. El Nino conditions are being mentioned as a potential issue but it's too early to speculate as to what impact this might have.

At this point exporters are happy as order books are in balance with projected production going forward. Levels of uncommitted product are relatively low which could help dairy prices to stabilize in the coming weeks.