Global dairy prices surge

07 Feb, 2019 10:40 AM
Comments
0
 
The Global Dairy Trade price index has recorded five consecutive rises. Source: Global Dairy Trade
It appeared dairy markets were factoring in the risk of drought in NZ disrupting production.
The Global Dairy Trade price index has recorded five consecutive rises. Source: Global Dairy Trade

Global dairy prices surged on Wednesday night with the Global Dairy Trade auction recording its biggest jump in more than two years.

The GDT price index lifted 6.7 per cent, the biggest increase since November 2016.

The lift was the fifth consecutive rise with the $US3265-a-tonne average price back to the same level as June last year before prices began a slow descent.

The rise surprised pundits, who had been forecasting a slight decline.

New Zealand-based ASB bank's senior rural economist Nathan Penny said it appeared dairy markets were factoring in the risk of drought in NZ disrupting production.

"This morning’s auction was one of those cases where we were happy to be wrong," he said.

"Indeed, in contrast to our expectations for a small fall, dairy prices spiked higher, with whole milk powder prices posting their largest price lift in over two years."

NZ had been in the midst of a heat wave in many parts of the country, including dairying regions, in recent weeks.

"Indeed, there is a material risk that this escalates into a drought and stymies production over the remainder of summer and into the autumn," Mr Penny said.

Most categories were up at the auction, led by WMP, which increased 8.4pc to $US3027/t.

Skim milk powder was up 3.9pc and cheddar was up 1.4pc.

Only butter milk powder defied the trend, down 3.1pc to $US3158/t.

Related reading

  • Milk production plummets
  • Global dairy prices leap 4.2%
  • Milk production forecast to hit 20-year low
  • Overall prices have lifted 18.7pc since this season’s low in November.

    But Mr Penny warned the price gain could be temporary.

    "NZ production is on a strong footing, running at more than 5pc ahead of last season on a season to December basis," he said.

    "Also, it’s still relatively early days in this dry spell, with a drought declaration some time away.

    "With that in mind, we keep one eye on the weather and the other on milk production over coming weeks."

    Mr Penny said low participation in the auction indicated some buyers were hoping the price spike was short-lived and they were prepared to wait and see if the dry weather had an impact.

    ASB has lifted its forecast for the NZ farmgate price by NZ25 cents a kilogram milk solids to $NZ6.25.kg, on the back of solid gains in December and January.

    The Australian Commodity Milk Price Index is still forecasting a decline in prices.

    In its January summary, Deloitte Access Economics said it was forecasting a decline in prices for Australia’s exports overall for 2018-19.

    Page:
    2
    Carlene Dowie

    Carlene Dowie

    is editor of Australian Dairyfarmer magazine

    POST A COMMENT


    Screen name *
    Email address *
    Remember me?
    Comment *
     
    Fertigation is the injection of fertilisers, soil amendments and other water-soluble products through an irrigation system. 
16 Apr 19 Fertigation is the injection of fertilisers, soil amendments and other water-soluble products through an irrigation...
    A fertigation trial in south-east Queensland for the past two years has shown it produces more pasture and cuts labour and fuel costs.
16 Apr 19 A fertigation trial in south-east Queensland for the past two years has shown it produces more pasture and cuts...
    light grey arrow
    This project was doomed from the start. Sri Lanka's Department of Animal Production and Health
    light grey arrow
    What an awesome article, this will save so much time and money for farmers across the world with
    light grey arrow
    The $1 a litre milk has already forced closure of numerous dairy farms. Lion Dairy & Drinks
    An industry survey revealed that farmers milking larger herds have adopted more precision technologies, and that is expected that by 2025 the adoption of technologies for data capturing and monitoring system parameters will increase.
08 Apr 19 An industry survey revealed that farmers milking larger herds have adopted more precision technologies, and that is...
    Virtual fencing (VF) technology has great potential to alleviate the costs, time and labour devoted to the establishment and maintenance of traditional physical fences.
08 Apr 19 Virtual fencing (VF) technology has great potential to alleviate the costs, time and labour devoted to the...
    Australian farm chemical manufacturer Nufarm has repaired its balance sheet and is now hunting for acquisition opportunities.25 Sep 16 Australian farm chemical manufacturer Nufarm has repaired its balance sheet and is now hunting for acquisition...
    Monopoly market may confront cropping sector under mega-merger proposal.22 Sep 16 Monopoly market may confront cropping sector under mega-merger proposal.