Middle East demand cushions global dairy price drop at latest GDT auction
The upheaval in the Middle East may have eased the fall in global dairy prices last week.
Global dairy prices have started the New Year in red hot form and ASB economist Nat Keall says a record milk price is now "a practical certainty".
ASB is now forecasting a milk price of $9.10/kgMS. If achieved it will easily eclipse the previous record price of $8.40 set in 2013-14 season.
Whole milk powder (WMP) prices are now sitting over US$4,000/MT; cheddar and butter prices set record highs in last week's auction. Overall prices lifted 4.6%, while WMP prices lifted by 5.6%.
Keall notes that, all up, the overall GDT price index made its largest single auction gain since last year's March auction.
Tight global supply is the driving prices higher.
Keall says domestic conditions over the summer have been poor, with hot and dry weather the order of the day in much of the country.
This month Fonterra revised its forecast collections for the season downwards by 25 million tonnes of milksolids.
"With a softer production outlook also evident in Europe and North America, it's a potent combination for dairy prices - there's a willingness on the part of buyers to pay big premiums to secure supply," says Keall.
He believes the underlying global dairy demand and supply balance should keep prices supported over the remainder of the season.
"With all contracts trading north of US$4,000/MT at present and longer-dated contracts trading at a premium, prices should keep up the momentum over the near term.
"We think that'll be enough to push this season's farmgate price north of the $9 mark."
Westpac is sticking with its forecast milk price of $9/kgMS and its senior agri economist Nathan Penny expects weakness in New Zealand dairy production will further underpin global dairy prices, at least in the short term.
"After a run of cold and wet weather earlier in the season, dry weather is now compounding the weakness in New Zealand production," says Penny.
With production in other key regions like the EU and US similarly sluggish, risks to the milk price are mostly upside, he notes.
"For example, ongoing dry weather could put additional dents in New Zealand production and push prices higher again. Meanwhile, omicron-related supply chain issues could also lead prices higher."
Newly elected Federated Farmers meat and wool group chair Richard Dawkins says he will continue the great work done his predecessor Toby Williams.
Hosted by ginger dynamo Te Radar, the Fieldays Innovation Award Winners Event put the spotlight on the agricultural industry's most promising ideas.
According to DairyNZ's latest Econ Tracker update, there has been a rise in the forecast breakeven milk price for the 2025/26 season.
Despite the rain and a liberal coating of mud, engines roared, and the 50th Fieldays Tractor Pull Competition drew crowds of spectators across the four days of the annual event.
Nationwide rural wellbeing programme, Farmstrong recently celebrated its tenth birthday at Fieldays with an event attended by ambassador Sam Whitelock, Farmers Mutual Group (FMG), Farmstrong partners, and government Ministers.
Six industry organisations, including DairyNZ and the Dairy Companies Association (DCANZ) have signed an agreement with the Ministry for Primary Industries (MPI) to prepare the country for a potential foot and mouth outbreak.
OPINION: It's official, Fieldays 2025 clocked 110,000 visitors over the four days.
OPINION: The Federated Farmers rural advocacy hub at Fieldays has been touted as a great success.