Wednesday, 06 March 2024 10:55

Dairy prices slip

Written by  Sudesh Kissun
Chinese demand remains around the 10-year average and overall prices remain near their highest since June 2023. Chinese demand remains around the 10-year average and overall prices remain near their highest since June 2023.

Dairy prices pulled back a bit in the overnight Global Dairy Trade (GDT) auction and it’s mostly to do with New Zealand’s biggest market, China.

According to Westpac NZ chief economist, Kelly Eckhold, Chinese buyers pulled back a little and Southeast Asian buyers picked up the slack in the auction.

He notes that Chinese demand remains around the 10-year average and overall prices remain near their highest since June 2023 and modestly above long-term averages.

“Of interest in terms of the market environment is the recent Chinese National People’s Congress held this week,” he says.

“The Chinese authorities laid out their targets for the economy this year. They set their growth target at 5% - in line with the 2023 target - but somewhat lower than average growth in the last 20 years and likely weaker than potential growth.

“Interestingly, the Chinese authorities also set a target for inflation at 3% - somewhat higher than the zero to negative outcomes seen of late.”

Eckhold believes it will be challenging for the authorities to meet these targets without significant policy stimulus – which so far is modest.

“Hence, we suspect the operating environment for exporters to China will remain challenging. Downside risks remain even though these may be a little less prominent than feared around August 2023.”

At last night’s auction, the GDT price index dropped 2.3% and the key whole milk powder (WMP) prices fell 2.8%.

The auction was weaker than recent auctions but more in line with recent weaker futures market trends, particularly the outcome of the GDT Pulse auction held on 27 February, noted Eckhold.

Most products posted price falls although cheese prices continued recent volatility, rising another 4%.

More like this

$10.25/kgMS milk price now in play

A significant rise in Global Dairy Trade (GDT) auction last week has prompted one bank to lift its forecast milk price for the season to above Fonterra's mid-point.

$10 milk price still on

Whole milk powder prices on Global Dairy Trade (GDT) remains above long run averages and a $10/kgMS milk price for the season remains on the card, says ASB senior economist Chris Tennent-Brown.

Mixed results on GDT

The first Global Dairy Trade (GDT) auction drew mixed results, with drop in powder prices and lift in butter and cheeses.

Featured

Editorial: Winston's words of wisdom

OPINION: Foreign policy is a real strength of Winston Peter and this is recognised by Ministry for Foreign Affairs and Trade (MFAT) officials who, so the story goes, wanted him in his present role because of his experience in that field.

National

Top ag scientist to advise PM

A highly experienced agricultural scientist with specialist knowledge of the dairy sector is the Prime Minister's new Chief Science Advisor.

Machinery & Products

Hose runner saves time and effort

Rakaia-based equipment manufacturer Pluck’s Engineering will soon start production of a new machine designed to simplify the deployment and retrieval…

» Latest Print Issues Online

Milking It

Science fiction

OPINION: Last week's announcement of Prime Minister’s new Science and Technology Advisory Council hasn’t gone down too well in the…

Bye bye Paris?

OPINION: At its recent annual general meeting, Federated Farmers’ Auckland province called for New Zealand to withdraw from the Paris…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter