Market Takes The Scenic Route
ANZ agri economist Matt Dilly looks at the impressive run of global dairy prices this year.
The Global Dairy Trade (GDT) recorded its second straight rise last week with whole milk powder and skim milk powder prices up 15 and 2.2% respectively.
ASB senior economist Chris Tennent-Brown says the powder price gains are especially encouraging after more strong production data from NZ dairy processors last week.
New Zealand milk production season-to-date was up 2.4% (up 3.1% on a milksolids basis) by the end of December.
Tennent-Brown says that if GDT prices sustain this positive start, then the final season price can end up above Fonterra's $9/kgMS forecast mid-point, but there is still a long way to go.
ASB is maintaining its $9.20/kgMS forecast for the current season.
NZX dairy analyst Rosalind Crickett notes that the global milk production picture, on the whole, remains robust.
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She says NZ milksolids collections in December were the second highest recording for the month, narrowly behind December 2014, with no drastic changes to this trajectory anticipated any time soon.
In the Northern Hemisphere, reports of milk dumping in the UK continue to drive home the narrative of a global ample supply.
"Ordinarily this would expect to put more downward pressure on milk powder prices, however, reports of tight inventories in the US seems to help provide some price support for SMP on the platform," says Crickett.
