NZ: Headline dairy price index up 2.8% – Westpac

Imre Speizer, market strategist at Westpac, points out that New Zealand’s last night’s GlobalDairyTrade auction, the first for 2020, saw prices rise for all products, the headline index up 2.8%.

Key Quotes

“Key export product - whole milk powder - rose 1.7%, in line with yesterday’s futures market predictions. At US$3150, it sits in the middle of the past nine-month range of $3000-$3300.”

“The other major export product - skimmed milk powder - rose 5.4%, while butter rose 3.7%, anhydrous milk fats rose 2.3%, and cheddar cheese rose 3.7%.”

“Last night’s results were a partial rebound from the previous auction on 17 December, where prices fell 5.1% with whole milk powder down 6.7%. The latter result possibly related to an increase in Fonterra auction volume. Last night’s volumes remained steady apart from a reduction in cheddar volumes.”

“NZ dairy production volume this season is likely to be slightly below the previous one, given the cooler-than-normal spring, and more recently, soil moisture deficits in some regions.”

“Futures market pricing for the current season’s Fonterra milk price haven’t changed over the past three weeks (unsurprising given futures trading activity is usually thin over the holiday period), after slipping from $7.39 to $7.35 following the price falls witnessed at the 17 Dec GDT auction.”