Strong production, tested demand send milk prices crashing
Strong global milk production and rebalancing of demand among key buyers has delivered one of the biggest drops in whole milk powder prices in recent years.
After a big drop just before Christmas, global dairy prices have rebounded.
Last week’s Global Dairy Trade (GDT) auction — the first for 2020 – saw prices rise for all products and a 2.8% lift in the price index.
Key export product – whole milk powder – rose 1.7%, in line with futures market predictions.
Westpac market strategist Imre Speizer says at US$3150, WMP price sits in the middle of the past nine-month range of US$3000-$3300.
The other major export product – skimmed milk powder – rose 5.4%. Butter rose 3.7%, anhydrous milk fats rose 2.3% and cheddar cheese rose 3.7%.
Speizer says last week’s results were a partial rebound from the previous auction, where the price index fell 5.1% -- with whole milk powder down 6.7%.
“The latter result possibly related to an increase in Fonterra auction volume. Last night’s volumes remained steady apart from a reduction in cheddar volumes,” he told Rural News.
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Westpac market strategist Imre Speizer. |
Speizer says NZ dairy production volume this season is likely to be slightly below the previous one – given the cooler-than-normal spring and, more recently, soil moisture deficits in some regions.
“That said, weather forecasters in Australia and New Zealand (Bureau of Meteorology, NIWA) indicate that although some parts of the Pacific Ocean are warmer than average, El Nino models continue to remain at neutral settings and forecast such though till at least autumn 2020.
“Futures market pricing for the current season’s Fonterra milk price haven’t changed over the past three weeks (unsurprising given futures trading activity is usually thin over the holiday period), after slipping from $7.39 to $7.35 following the price falls witnessed at the December GDT auction.”
Open Country Dairy chief executive Steve Koekemoer expects stability to continue for the balance of the season.
“No doubt, we will have a few forecast tweaks up and down, but we do not foresee a significant downside,” he says.
With Fonterra's UHT plant at its Edendale site less than a year from completion, demand continues to grow for products the plant will produce, such as Anchor Whipping Cream.
A new $50,000 scholarship fund designed to support and empower women in the New Zealand dairy industry through leadership development has been launched.
Many farmers around the country are taking advantage of the high dairy payout to get maximum production out of their cows.
In 2015, the signing of a joint venture between St Peter's School, Cambridge, and Lincoln University saw the start of an exciting new chapter for Owl Farm as the first demonstration dairy farm in the North Island. Ten years on, the joint venture is still going strong.
Sheep milk processor Maui Milk is on track to record average ewe production of 500 litres by 2030, says outgoing chief executive Greg Hamill.
Parliamentary Commissioner for the Environment Simon Upton is calling for cross-party consensus on the country's overarching environmental goals.
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