Payout risk after GDT drop – again

Rural economist Nathan Penny said he was surprised that Fonterra maintained its milk price forecast at $6/kgMS last week.

Penny says all the seven main products that ASB monitors posted falls. Overall prices now stand 42.2% lower than a year ago

SMP, BMP and casein posted the biggest falls, dropping 9.5%, 12.9% and 14.3% respectively. Meanwhile, WMP fell 4.3% and the other products recorded falls in the 5% to 6% range.

Russian import ban may be putting more downward price pressure on products with strong European supply (e.g. SMP) relative to NZ-dominated products (WMP), he says.

Higher prices for later-dated contracts still hint at support for prices later in the season, but at the expense of short-term weakness.