After a bumper season, New Zealand milk production is expected to be 9 – 10% ahead of last season. Australia has also had a good season. Production in Tasmania is thought to have increased by 10% which has largely contributed to the overall expected 4% increase in Australian production for the season. Farmers in Australia and New Zealand are optimistic for the coming season but are very aware that farmgate prices will not be as good as this season.
With milk production being higher than usual as the season winds down, there has been extra product on the market. This has been easily absorbed, with some of it being diverted to the global dairy trade auction. Because manufacturing plants have been running for longer than usual with the increased milk output, the shutdown period for maintenance through winter will be squeezed.
Milk powder production is finally winding down. The skim milk powder market is mixed, however prices did slip back US$63/tonne to US$2775/tonne. The whole milk powder is weak and prices are lower. Prices last week eased US$150/tonne to US$2925/tonne. There is speculation amongst traders and handlers that milk powder prices have nearly bottomed out and should not dip below prices in other international markets.
Butter markets in Oceania continue to be weak and prices are generally trending down. Prices are US$3000/tonne on average, a drop of US$200/tonne from a fortnight ago. When compared to the same time last year, prices today are 38% lower. At the latest global dairy trade auction, anhydrous milk fat plummeted 11.9% on average across all contracts.
Oceania cheddar markets are unsettled with prices steady to lower. Manufacturers and handlers are stating that the extra milk production towards the end of the season increased cheese production to higher levels than anticipated. Prices have eased just US$50/tonne on average in the last fortnight to US$3600/tonne.
Market Brief by iFarm.co.nz
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