Wednesday, 06 July 2016 13:08

GDT drop the impact of Brexit

Written by 
ASB rural economist Nathan Penny. ASB rural economist Nathan Penny.

The 0.4% drop in dairy price index overnight in the GlobalDairyTrade auction was likely Brexit's impact on dairy prices, says ASB rural economist, Nathan Penny.

The impact is likely to be modest and temporary, he says.

"We stick with our 2016/17 milk price forecasts $6/kgMS. However, we note that any further temporary setbacks to prices or alternatively the absence of an improvement in prices over coming months will make our forecast increasingly difficult to maintain," he says in his Quickview briefing.

WMP prices were down 1.6%, while in contrast SMP prices lifted 2.6%.

"In general, the fall was consistent with our expectations that Brexit's impact on dairy prices is likely to be modest and temporary. This reaction is in line with the similarly modest agricultural market reaction to date. Moreover, the Brexit doesn't change agricultural or dairy market fundamentals, so we wouldn't expect markets to react much anyway."

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