The global dairy price index dipped slightly overnight.
With the last four GTD auctions recording a drop in prices, last night’s positive results would be good news for farmers.
Prices rose for most products on offer, including a solid 3.6% increase in whole milk powder prices.
Westpac senior economist Anne Boniface notes this was the first lift in whole milk powder prices since March: there were smaller improvements in fats prices.
Boniface says global growth in milk supply is still expected to be relatively modest over the second half of this year.
“While much will depend on pasture conditions in New Zealand, it’s unlikely that last year’s exceptionally strong growth in milk production during spring will be repeated.
“And with the national herd likely to be static, or even contract a little, further growth in the national milk supply will hinge on incremental productivity improvements.”
One crucial development to keep an eye on is how Chinese demand evolves in the coming months.
Buying from the North Asian region (dominated by China) has been strong through the first half of the year. Most recently, the proportion of GlobalDairyTrade sales to the North Asian region has been notably higher than usual through June and July.
Boniface says this suggests that consumer demand for dairy products in China seems to be holding up well, despite growing headwinds for the Chinese economy and trade tensions.
“While last night’s GlobalDairyTrade auction was a little stronger than we had pencilled in, we remain comfortable with our $6.90 milk price forecast for the current season,’ she says.
AMF index up 1.7%, average price US$5,523/MT
Butter index up 1.7%, average price US$4,406/MT
BMP not offered
Ched index up 3.3%, average price US$3,869/MT
LAC index not available, average price not available
RenCas index down 3.4%, average price US$7,044/MT
SMP index up 3.8%, average price US$2,505/MT
SWP index not available, average price not available
WMP index up 3.6%, average price US$3,074/MT