Milk Glut Drags Fonterra Forecast Down to $9.20/kgMS
A milk glut around the world shows no sign of easing, putting downward pressure on farmgate milk prices for the next few months.
With the global market awash with milk, dairy prices recorded its third consecutive rise, with the GDT price index rising 6.7%.
The whole milk powder price, used as a benchmark to set the farmgate price, rose a whopping 5.3% to US$3,614/metric tonne, a three-month high.
Skim milk powder performed better, rising 10.6% to US$2,874/MT, just a few dollars shy of recording a three-year high price.
NZX head of dairy insights, Cristina Alvarado, says the GDT event delivered the strongest average index increase since March 2021 when the first event of that month recorded a 15% gain.
“The scale of this move materially exceeded market expectations and reflected a combination of seasonally tightening supply from New Zealand, concentrated regional demand, and constrained availability across several key commodities, rather than a sudden shift in global milk production trends,” she says.
She notes that whole milk powder prices were similarly supported by seasonal supply tightening. European WMP production has been materially lower year to date, limiting alternative origin availability and reinforcing buyer reliance on New Zealand supply.
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“While futures markets had priced in modest gains, the reduced spot volumes offered at this event pushed prices beyond pre-event expectations.”
