Over the next two months as the 2017/18 milking season gets under way in earnest in New Zealand, the country’s largest dairy processor, Fonterra, will begin ramping up its sales volumes of whole milk powder (WMP) to meet the traditional counter-seasonal demand cycle.
For this week’s GDT auction, Fonterra will offer 17,250t of WMP for sale, which is a near 20% increase on the volume of WMP offered in recent months. For the two GDT auctions in September, Fonterra will offer close to 17,500t of WMP for sale at each event, while the two GDT auctions in October will see close to 20,000t of WMP sold at each auction. In total, Fonterra is forecasting that it will sell more than 350,000t of WMP this year on the GDT auction platform.
For dairy markets, the seasonal spike in production from New Zealand is well anticipated. In dairy futures markets, prices are relatively subdued ahead of this week’s GDT auction and the planned increase in product volumes.
The price of September, October and November contracts for WMP has risen by almost 2% since the last GDT auction (see graph), which may point towards a slight increase in WMP prices at this week’s GDT event. In Europe, futures markets for butter prices have stabilised somewhat with September, October and November contracts for EU butter remaining around the €6,700/t mark.
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