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20 Feb 2018 16:53
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  •   Home > News > Business

    Pressure on dairy prices after GDT drop

    Dairy prices have fallen 3.5 per cent at Fonterra's GlobalDairyTrade auction with one analyst predicting there will be downward pressure on the farmgate payout.


    Fonterra
    Fonterra

    Dairy product prices have fallen for the third straight time at Fonterra's GlobalDairyTrade auction as whole milk powder extended its decline and skim milk powder recovered.

    The GDT price index fell 3.5 per cent from the previous auction two weeks ago and the average price to $US3105 ($NZ4,347) a tonne, the lowest since April. Some 35,072 tonnes of product was sold, down from 35,669 tonnes at the previous auction.

    Whole milk powder fell 5.5 per cent to $US2852 a tonne.

    The auction comes just a week after Fonterra reiterated its forecast 2017/18 payout of $6.75 per kilogram of milk solids.

    Chairman John Wilson says farmers enjoyed a good season in 2016/17 "after two seasons of unusually low milk prices" although the projection exceeds some analyst forecasts.

    "The fall in WMP prices will increase the pressure on milk price forecasts," said AgriHQ analyst Amy Castleton.

    AgriHQ had forecast a milk price of $6.36 but that would likely be revised lower this week, she said.

    North Asian buyers bought less product overall at this auction and it is likely that "Chinese buyers have now fulfilled their needs to land milk powder whilst the lower tariff rate applies from 1 January".

    Butter fell 3.6 per cent to $US5516 a tonne, matching the direction of November butter futures.

    Butter demand has soared this year, stoked by a surge in the popularity of natural products in first world markets like the US and Europe.

    At the latest GDT auction, rennet casein dropped 4 per cent to $US5465 a tonne while skim milk powder rose 1.2 per cent to $US1818. Cheddar fell 2.8 per cent to $US4001 and anhydrous milk fat rose 0.5 per cent to $US6894 .

    Butter milk powder rose 7.2 per cent to $US1931 a tonne and no prices were available for lactose.

    There were 133 winning bidders out of 165 participating at the 14-round auction. The number of qualified bidders rose to 554 from 544.


    NZN




    © 2018 NZN, NZCity


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