New Zealand dairy prices improve slightly in GlobalDairyTrade auction overnight

During previous night’s GlobalDairyTrade auction, New Zealand dairy prices improved, rising slightly by 1.7 percent, thanks to stronger milkfat prices. However, prices of whole milk powder remained flat, dropping 0.2 percent, whereas prices of skim milk powder and AMF rose 3 percent and 4.6 percent respectively.

The stabilization of whole milk powder prices comes after a rise of 34 percent in the earlier four auctions. Locally, domestic production season has reportedly begun well in several parts of New Zealand. Given than a seasonal rise is taking place in production, a close watch would be kept on production volumes, said Westpac in a research note.

Given that the global milk production is now declining in major exporting regions throughout the world, and that farmers in New Zealand are expected to be more dependent on pasture growth this season, much would be dependent on how production season in New Zealand would progress in the coming months, according to Westpac.

As the result released today was widely consistent with Westpac’s projections, the key assumption supporting its NZD 5 farm gate milk price forecast remains that is seen as a partial retracement of the recent big run up in whole milk powder prices in the months ahead. If this does not take place, there continues to be considerable upside risk to the NZD 5 farm gate milk price forecast, added Westpac.