ANZ Warns of Milk Price Risks as New Dairy Season Begins
The new dairy season is kicking off with plenty of risks to the forecast farmgate price, both upside and downside, says ANZ agricultural economist Matt Dilly.
The GDT price index rose 0.8% but WMP price lifted 1.5% compared to the last auction to settle around US$3448/tonne. Skim milk powder (SMP) also rose 2.2% to reach US$2,809/t, its highest average price on the platform in the last 12 months.
NZX dairy analyst Rosalind Crickett notes that all prices rose at the latest auction aside from the milk fat products, of which both anhydrous milk fat (AMF) and butter prices softened.
“Given the price movement pencilled in by the SGX-NZX Derivatives market before the auction, results were largely in-line with our expectations. On this occasion 89% of the total 43,497t available was sold,” she says.
Factoring market sentiment, the increased demand for both milk powders is not surprising - given the off-peak of milk production in the northern hemisphere combined with factors such as the bluetongue virus which has been increasing in prominence in both the UK and Europe, according to Crickett.
Looking at milk fats, Anhydrous Milk Fat (AMF) eased -1.2% overnight to settle at US$7,220/t – its first change of direction after four consecutive increases at GDT events since July. Butter also softened -1.7% to reach an average price of US$6,546/t.
Among other products, cheddar rose 2.9% to reach its second highest price in the last 12 months of US$4,441/t. Mozzarella continues to know no limits, seeing a further 4.5% increase in prices to US$5,351/t. Lactose also saw a 3.5% increase this time, after a heavy decline at GDT 363, settling at US$896/t.
North Asia maintained its top purchasing spot for both milk powders and butter – accounting for 51% of the total product volumes. Southeast Asia/Oceania were the top buyer of AMF, while Africa was for cheddar.
