Rabobank flags rising global dairy prices, warns of downside risks ahead
While global dairy commodity prices continue to climb in most key exporting countries, the second half of the year is expected to bring increased downside risks.
The GDT price index rose slightly - 0.6% to an average price of US$3395/tonne.
However, whole milk powder (WMP) prices softened overnight, dropping almost 3% to US$3143/tonne.
Rabobank dairy analyst Emma Higgins says any rise in GDT price index is welcome.
“We’ll take that: last year, the index price was 46% lower (US$2,329/tonne) for the first auction of the 2016/-7 milk production season.”
Commenting on the drop in WMP prices, Higgins says weaker prices for contracts across October and November 2017 suggest the market is anticipating strong New Zealand milk supply following robust opening price signals and highlighted by additional WMP volumes added to the GDT across these periods.
All other dairy products are in positive territory. Cheese gets a significant mention with a 14.5% climb in this latest event and SMP leapt up almost 8% (albeit from a low base). European SMP intervention product has trickled to a standstill: no SMP has been entered into intervention for the latest week.
Oceania dairy fats continue to cream it.
Higgins says average butter prices soared 3.3% to US$5,631/tonne – the highest average price for butter in GDT history – helped by a European shortage of product.
Key results
AMF index down 1.2%, average price US$6,569/MT
Butter index up 3.3%, average price US$5,631/MT
BMP index up 5.8%, average price US$2,092/MT
Ched index up 14.5%, average price US$4,285/MT
LAC index up 1.0%, average price US$971/MT
RenCas index up 4.8%, average price US$6,849/MT
SMP index up 7.9%, average price US$2,156/MT
WMP index down 2.9%, average price US$3,143/MT
