Tuesday, 09 July 2024 07:55

Farmers hope GDT price dip a one-off

Written by  Sudesh Kissun
Richard McIntyre says that while the price drop across the board wasn’t something farmers wished to wake up to, it was just one auction. Richard McIntyre says that while the price drop across the board wasn’t something farmers wished to wake up to, it was just one auction.

Federated Farmers dairy chair Richard McIntyre believes farmers won't be too concerned with last week's Global Dairy Trade (GDT) price drop.

He points out that while the price drop across the board wasn't something farmers wished to wake up to, it was just one auction.

"We know the GDT auction has ebbs and flows throughout the year and a lot depends on demand and supply throughout the world," he told Dairy News.

McIntyre says milk processors factor these things in when forecasting milk price to their suppliers.

"This is just one auction. Farmers will be watching closely the next few auctions."

Last week's auction saw big falls in 'fats' prices: AMF prices dropped 10.7% and butter 10.2%. Whole milk powder prices dropped 4.3% to US$3,218/tonne. Overall prices still sit above long-term averages (3.6% over the 10-year average) although the key WMP price is now just below the 10-year average and almost 6% below its 5-year average.

Westpac chief economist Kelly Eckhold says futures markets had suggested a significant move down in prices was likely following the fall in prices at the GDT "Pulse" auction.

"There is a growing view that the significant run up in 'fats' prices - especially anhydrous milk fat - may have run their course and that the current higher price levels are encountering buyer resistance."

Southeast Asian buyers took up a higher proportion of product and Middle Eastern buyers stepped back.

Demand from China/North Asia appeared relatively stable in last week's auction.

Eckhold says such a large fall in prices naturally increases uncertainty on future auction developments.

"The fall in prices balances up our previous upside risks on our 2025 milk price forecast of $8.40. Futures market prices still look consistent with that kind of outcome."

Fonterra has a forecast midpoint of $8/kgMS.

McIntyre says an $8 milk price "is only break-even" for most farmers.

"For the average farmers, there's not huge amount of headroom with a $8 payout. If it drops, then that will make things quite uncomfortable for a lot of them," he says.

McIntyre says that while on-farm inflation is easing, interest rates remain high.

More like this

Another win

OPINION: Feds Southland 'pres' Jason Herrick and colleagues who continue the good fight against bureaucratic madness on behalf of farmers, have had another win - for now, at least - getting a court decision granting a 'stay' on rules in the Southland Water and Land Plan until changes can be made to section 70 of the RMA by central goverment, somtheing they clearly signaled after the election.

Court decision a win for Southland farmers

Federated Farmers says it welcomes a recent court decision which granted a stay on rules in the Southland Water and Land Plan until legislative changes can be made by government.

Featured

Pāmu farm opens gate to urban visitors

For many urban New Zealanders, stepping into Pāmu’s Pinta dairy farm near Taupo last month was the first time they had had the chance to experience farm life up close.

National

Machinery & Products

Gong for NH dealers

New Holland dealers from around Australia and New Zealand came together last month for the Dealer of the Year Awards,…

A true Kiwi ingenuity

The King Cobra raingun continues to have a huge following in the New Zealand market and is also exported to…

Data crucial to managing water

Watermetrics was formed as a water data collector and currently supplies and services modern technology such as flow meters, soil…

» Latest Print Issues Online

Milking It

Dairy power

OPINION: The good times felt across the dairy sector weren't lost at last week's Beef + Lamb NZ annual meeting.

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter