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

Dr Mike Joy says sorry, escapes censure

Academic Dr Mike Joy and his employer, Victoria University of Wellington have apologised for his comments suggesting that dairy industry CEOs should be hanged for contributing towards nitrate poisoning of waterways.

Farmer anger over Joy's social media post

A comment by outspoken academic Dr Mike Joy suggesting that dairy industry leaders should be hanged for nitrate contamination of drinking/groundwater has enraged farmers.

Featured

Australia develops first local mRNA FMD vaccine

Foot and Mouth Disease outbreaks could have a detrimental impact on any country's rural sector, as seen in the United Kingdom's 2000 outbreak that saw the compulsory slaughter of over six million animals.

NZ household food waste falls again

Kiwis are wasting less of their food than they were two years ago, and this has been enough to push New Zealand’s total household food waste bill lower, the 2025 Rabobank KiwiHarvest Food Waste survey has found.

Editorial: No joking matter

OPINION: Sir Lockwood Smith has clearly and succinctly defined what academic freedom is all about, the boundaries around it and the responsibility that goes with this privilege.

DairyNZ plantain trials cut nitrate leaching by 26%

DairyNZ says its plantain programme continues to deliver promising results, with new data confirming that modest levels of plantain in pastures reduce nitrogen leaching, offering farmers a practical, science-backed tool to meet environmental goals.

National

Machinery & Products

JDLink Boost for NZ farms

Connectivity is widely recognised as one of the biggest challenges facing farmers, but it is now being overcome through the…

New generation Defender HD11

The all-new 2026 Can-Am Defender HD11 looks likely to raise the bar in the highly competitive side-by-side category.

» Latest Print Issues Online

Milking It

Full cabinet

OPINION: Legislation being drafted to bring back the controversial trade of live animal exports by sea is getting stuck in the…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter