Dairy product prices rebound from five-year low   16 Oct 2014

Article - BusinessDesk

Dairy product prices rebound from five-year low

Oct. 16 (BusinessDesk) - Dairy product prices rose in the latest GlobalDairyTrade auction, recovering from the lowest level in five years, as gains in anhydrous milk fat and sweet whey powder outweighed declines in rennet casein and butter milk powder.

The GDT average winning price rose 1.4 percent to US$2,640, up from US$2,599 two weeks ago. Some 50,816 tonnes of product was sold, down from 55,057 tonnes of product two weeks ago.

Some traders had been expecting prices to rise after falling to their lowest since 2009 in the last auction two weeks ago, given prices of other commodities including wheat, corn and sugar have gained this month and the latest auction didn't fall on a Chinese public holiday. Fonterra has said prices will find a base as global supplies come back into balance and China resumes buying.

Even so, the AgriHQ Seasonal Farmgate Milk Price for the 2014-15 season has decreased by 30 cents to $4.75 per kilogram of milksolids following the October 15 GlobalDairyTrade auction. This compares to Fonterra’s current forecast for the season of $5.30/kgMS.

The AgriHQ Snapshot Farmgate Milk Price indicates that if the latest GlobalDairyTrade prices were achieved across the entire season the milk price would be just $3.90/kgMS.

“The improvement in prices at last night’s auction result is a good start but we need to see a continuation of this upward trend in order to for farmgate milk prices to improve,” AgriHQ dairy analyst Susan Kilsby said in a note. “Despite a higher whole milk powder price the AgriHQ Seasonal Farmgate Milk Price has fallen further as the recovery in dairy commodity prices is now expected to be slower.”

In the latest GDT auction, anhydrous milk fat climbed 7.4 percent to US$3,346 a tonne, sweet whey powder advanced 4.3 percent to US$1,225 a tonne, while butter rose 3.9 percent to US2,614 a tonne.

Whole milk powder gained 3.1 percent to US$2,503 a tonne.

The NZX Dairy Futures market indicates that whole milk powder will not exceed US$3,000 per tonne tonne until April 2015, whereas a fortnight ago prices were expected to be back above at this level by the end of 2014.

“A farmgate milk price below $5/kgMS will make it extremely difficult for farms to turn a profit this season," according to Kilsby. "Farmers will cut spending wherever they can, which in turn will impact businesses that supply products and services. The lack of profitability in the dairy sector will initially be felt in our small rural towns but eventually the downturn will impact New Zealand’s whole economy.”

Last week Fonterra reduced the volume of whole milk powder which they plan to sell on GlobalDairyTrade over the next 12 months by 7 percent.

“The lower volume of product on offer is likely to provide some support to prices, but as volumes are close to their seasonal highs it will take some time for this market to fully recover,” Kilsby said.

Meanwhile, cheddar fell 1 percent to US$3,007 a tonne, while skim milk powder shed 3.6 percent to US$2,462 a tonne.

Butter milk powder declined 3.8 percent to US$2,685 a tonne, while rennet casein dropped 5.3 percent to US$7,780 a tonne.

Lactose was not offered at the event.

The New Zealand dollar traded as high as 79.94 US cents at 9:40am in New York, and recently traded at 79.69 US cents. Earlier in the day, the kiwi had traded around 78.42 US cents.

There were 132 winning bidders out of 167 participating bidders at the 14-round auction. The number of qualified bidders rose to 668, up from 657 at the last auction.

(BusinessDesk)

Add a comment

News

Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students

29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more

New Zealand reaffirms support for Flight MH17 judicial process

7 Mar 2020 News By Rt HON WINSTON PETERS
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more

Business

NZ Government's Economic package to fight COVID-19

17 Mar 2020 Business News By RT HON JACINDA ARDERN
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more

NZ Government announces aviation relief package

19 Mar 2020 Business News By Hon Phil Twyford
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more

Living

Diversity was Key at New Zealand Trade Tasting in London

6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall. It was the first... more

Kiwi author stuns Behind the Butterfly Gate

12 Jan 2022 Arts By Charlotte Everett
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...  New Zealand writer Merryn Corcoran’s... more

Property

Fairer rules for tenants and landlords

17 Nov 2019 Property By Minister Kris Faafoi
17 NOVEMBER 2019 The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more

New Zealand Government will not implement a Capital Gains Tax

17 Apr 2019 Property By RT HON JACINDA ARDERN
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more

Migration

Boosting border security with electronic travel authority – now over 500,000 issued

19 Nov 2019 Migration By Hon Iain Lees-Galloway
19 NOVEMBER 2019 We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more

Christchurch reinstated as refugee settlement location

18 Aug 2018 Migration
18 AUGUST 2018 HON IAIN LEES-GALLOWAY The announcement that Christchurch can once again be a settlement location for refugees... more

Travel

Gallipoli Anzac Day services cancelled

19 Mar 2020 Travel & Tourism By RT HON JACINDA ARDERN
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more

New Zealanders advised not to travel overseas

19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas more

Sport

The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners

27 Oct 2019 Cricket By Charlotte Everett
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more

PREVIEW: All Blacks v England semi-final

26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more

Columns

Gordon Campbell on the Gareth Morgan crusade

11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade First published on Werewolf The ghastly likes of Marine Le Pen in France and Geert ... more

Gordon Campbell on the US election outcome

10 Nov 2016 Opinion
Column - Gordon Campbell   Gordon Campbell on the US election outcome Well um.. on the bright side, there (probably)... more

Kiwi Success

Congratulations to Loder Cup winner

26 Sep 2018 People By Hon Eugenie Sage
25 SEPTEMBER 2018 The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more

Appointments to New Zealand National Commission for UNESCO

16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO HON JENNY SALESA Associate Education Minister Jenny Salesa is... more

Recruitment

Historic pay equity settlement for education support workers

14 Aug 2018 Recruitment By RT HON JACINDA ARDERN
14 AUGUST 2018Historic pay equity settlement for education support workers RT HON JACINDA ARDERN HON CHRIS HIPKINS Prime Minister The... more

Historic pay equity settlement for education support workers

22 Aug 2018 Recruitment By RT HON JACINDA ARDERN
14 AUGUST 2018Historic pay equity settlement for education support workers RT HON JACINDA ARDERN HON CHRIS HIPKINS Prime Minister The... more