CountryMile

Farm Talk

Dairy off to a strong start

Milk-powder-store
The sustained lift in global dairy prices of 16% over the past four months has raised the possibility of a farm gate milk price for the season in the mid-$7/kg range.

After the first Global Dairy Trade (GDT) event for 2021, NZX’s milk price prediction rose 9c to $7.36.

The GDT index on January 6 lifted 3.9%, the seventh gain in the past eight auctions, conducted fortnightly since early September.

Whole milk powder (WMP) was up 3.1% and skim milk powder (SMP) up 4.1%, along with anhydrous milk fat (AMF) up 5.5% and butter up 7.2%.

Analysts say demand for dairy products, especially from China, was very strong and sustained throughout the New Zealand peak milk period.

“Dairy commodity prices have been incredibly resilient throughout the pandemic and there is certainly potential for a high payout this season,” NZX dairy analyst Amy Castleton said.

She says dairy futures prices for AMF and butter jumped after the GDT results were known.

WMP futures prices were consistently around US$3300/tonne for the forward contract periods.

In the physical market WMP has risen from $2900 to $3300 during the past four months, an increase of 14%.

The WMP price on GDT has increased by 25% since the start of the NZ dairy season, from US$2677 in June to $3304 at present.

ASB senior economist Chris Tennent-Brown says WMP prices were now comfortably ahead of where they were a year ago.

“The contract curve remains flat and stable, so price gains aren’t being driven by short-term supply fears,” he said.

Milk production figures from the Dairy Companies Association of NZ showed November was down 2.7% compared with 2019, but that year-to-date was up 0.6%.

The ASB milk price forecast of $7 was steady and Fonterra could have reason to narrow its forecast range of $6.70 to $7.30, Tennent-Brown said.

Discussion

Leave a Reply

Your email address will not be published. Required fields are marked *

Save Filter
×