The GDT auction results this week once again underpin a steadily improving dairy commodity market.
The result this week (+1% to average $4,011 US) on the back of the last result (+4%, 7 Sept) show that even as the seasonal New Zealand milk supply peaks there is demand in the market for dairy product.
Whole milk powder (WMP) lifted 2.2% to average $3,777/t – WMP is the product to watch in this exchange, especially at this time of the year. Skim milk powder (SMP) also increased to $3,302/t (+0.9%).
The New Zealand auction results mirror the EU trend (or vice versa) for the last number of weeks, as SMP and WMP trend upwards. EU prices remain about 20% ahead of the same time last year.
Of the EU 27 in terms of milk supply, the big players France, Germany and the Netherlands are all still back in supply relative to last year – at – 1.3%, – 1.6% and – 1.9% respectively.
These are the latest statistics that are available up to July/August. US supply continues to stay ahead of last year also.
New Zealand is cranking up seasonal supply about now and remember Fonterra’s 2020/21 farmgate milk price forecast of $7.45-$7.65/kg MS is expected to reach a seven-year high on strong Chinese and southeast Asian powder demand.
Fonterra’s initial farmgate milk price forecast of $7.25-$8.75/kg MS began up an additional 6% at the midpoint, although the wide initial range reflects a number of major risks. Also worth pointing out is that New Zealand cow and heifer slaughter rates declined 0.9% on a year-on-year basis during June 2021, finishing lower for the fifth time in the past six months.