Milk Glut Drags Fonterra Forecast Down to $9.20/kgMS
A milk glut around the world shows no sign of easing, putting downward pressure on farmgate milk prices for the next few months.
“In view of the recent price surge, it is not surprising dairy markets wanted to catch their breath. WMP prices, for example, had spiked 35% over August and September,” says ASB senior rural economist Nathan Penny.
Whole milk powder (WMP) and skim milk powder (SMP) prices dipped 3.8% and 3.9%, respectively.
“The result was a touch weaker than expectations heading in. Futures market pricing hinted at a WMP fall in the 0% to 2% range prior to the auction.
“The price dip was broad-based, with seven out of eight products on offer recording price falls. Only butter milk powder recorded a rise (up 9.3%).
“From here, we expect prices to track largely sideways over coming auctions as markets wait for further confirmation of weakening NZ production.”
Key Results
AMF index down 1.0%, average price US$4,954/MT
Butter index down 0.3%, average price US$3,891/MT
BMP index up 9.3%, average price US$2,408/MT
Ched index down 2.3%, average price US$3,430/MT
LAC index down 9.7%, average price US$744/MT
RenCas index down 3.7%, average price US$6,574/MT
SMP index down 3.9%, average price US$2,209/MT
WMP index down 3.8%, average price US$2,681/MT
