$10 milk price still in sight despite global dairy markets softening
A $10 milk price remains on the cards for this season despite recent softening of global dairy prices.
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.”
The Government has announced it has invested $8 million in lower methane dairy genetics research.
A group of Kiwi farmers are urging Alliance farmer-shareholders to vote against a deal that would see the red meat co-operative sell approximately $270 million in shares to Ireland's Dawn Meats.
In a few hundred words it's impossible to adequately describe the outstanding contribution that James Brendan Bolger made to New Zealand since he first entered politics in 1972.
Dawn Meats is set to increase its proposed investment in Alliance Group by up to $25 million following stronger than forecast year-end results by Alliance.
A day after the ouster of PGG Wrightson’s chair and his deputy, the listed rural trader’s board has appointed John Nichol as the new independent chair.
The iconic services building at National Fieldays' Mystery Creek site will be demolished to make way for a "contemporary replacement that better serves the needs of both the community and event organisers," says board chair Jenni Vernon.
OPINION: Ageing lefty Chris Trotter reckons that the decision to delay recognition of Palestinian statehood is more than just a fit…
OPINION: A mate of yours truly recently met someone at a BBQ who works at a big consulting firm who spent…