Tuesday, 22 September 2020 08:56

Prices expected to wax and wane

Written by  Sudesh Kissun
Good weather is boosting NZ milk production this season. Good weather is boosting NZ milk production this season.

Expect more of the same as dairy prices on Global Dairy Trade (GDT) broke a two-month drought and posted an increase last week.

The GDT price index rose 3.6% while whole milk powder (WMP) prices rose 3.2% to US$2,985/metric tonne. WMP prices now sit 8.5% below their recent peak in July.

Westpac senior agri analyst Nathan Penny says prices continue “to wax and wane as expected”.

“The pattern of price falls followed by prices rises is in line with what we have been expecting,” he told Rural News.

Covid outbreaks over August and early September put pressure on market confidence and in turn on prices. But as Covid case numbers settle, confidence has returned to dairy markets and prices have stabilised once again.

Penny expects this pattern to continue.

“By and large most key dairy markets (notably China) continue to manage Covid well, but outbreaks are likely to occur from time to time,” he says.

“On the flipside, if the virus surges in key markets, then prices are likely to fall below recent ranges. Stepping back, global dairy demand, particularly from China, continues to underpin dairy prices. We do note though that milk fat prices are softer given their exposure to restaurant and café demand more than other products. On the supply side, global supply growth is relatively contained.”

RaboResearch dairy analyst Thomas Bailey says the price rise signals continued volatility.

But he notes that farmers will be happy with last week’s results.

“The results should support broader increases in prices around the world, boosting profitability for dairy farmers, and eventually resulting in a bump in milk supplies,” he says.

One factor playing on buyers’ minds would be security of supply from New Zealand. A weather calamity in NZ would drive prices higher.

However, ASB senior analyst Chris-Tennent Brown says with good spring weather, data shows production is up on last year.

“We don’t think buyers will be too worried about availability of product from New Zealand over the coming months.

“With that in mind, the WMP prices achieved last week are encouraging.”

More like this


Back the sector that backs NZ

OPINION: The biggest issue currently facing our industry is environmental policy, writes Beef+Lamb NZ chief executive Sam McIvor.



Lamb price down, but not weak

While lamb prices are starting the new season at around 16% below last year’s levels, they are not outright weak,…

Quota split a major worry

New Zealand meat exporters want the EU and UK to get serious on reaching a deal on post-Brexit quotas.

NZ meat exports at risk

Nearly half of our country’s meat exports are at risk unless there is urgent action by government to allow migrant…

Machinery & Products

Claas cargo wagon

CLAAS has extended the versatility, productivity and user comfort of its CARGOS dual purpose transport wagons with the addition of…

These tractors are pumping

CLAAS has announced it will introduce a new automatic tyre inflation system across its AXION and ARION series of tractors.

Great hay cut at speed

Contractors and farmers on the lookout to mow and condition at higher speeds, while producing better quality hay and forage,…

Fendt enters NZ harvest market

Farm machinery brand Fendt has expanded into the harvester market in Australia and New Zealand, with is Ideal combine harvester.

» The RNG Weather Report

» Latest Print Issues Online

The Hound

He's back!

OPINION: This old mutt understands that former Fonterra chief executive Theo Spierings has landed himself a new gig back in his…


OPINION: Your canine crusader understands that the farmer’s favourite politician – Environment Minister David Parker – not content with implementing…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter