ao link

Dairy prices hold firm at GDT - defying tumble in futures


Dairy prices showed a small, but surprise, recovery at GlobalDairyTrade, as whole milk powder values held steady – defying signals from futures markets for hefty declines.


Dairy prices, as measured by the GlobalDairyIndex, edged 0.3% higher, led by strength in milk fats, with butter milk powder soaring 17.6% to $3,710 a tonne, its highest on data going back five years.


Butter itself gained 2.0% to $5,776 a tonne, close to a three-year high.


Cheese gained 2.2% to an 11-month high of $4,393 a tonne, amid ideas of recovery in foodservice buyers, a key demand source, as Covid restrictions ease in many countries.


‘Tough time’

However, the biggest surprise was in whole milk powder, which forms the bulk of products traded at GlobalDairyTrade (GDT), and showed a marginal increase in price, of $2 to $4,085 a tonne, contrary to the steep decline that investors in NZX futures in the product were factoring in.


Futures tumbled after the last auction, on March 16, amid rumours that Chinese buyers were stepping back after a purchasing spree which last month drove GDT whole milk powder prices to a seven-year high.


The March price surge was fuelled by shipping hiccups, which sparked concerns of delays in deliveries from many origins – although not so much from Oceania, which provides most of the product sold at GDT.


“Resellers have reportedly had a tough time passing the higher GDT prices on to end users inside of China, which has turned the mood a bit bearish,” Nate Donnay, director of dairy market insight at StoneX, said ahead of the latest auction, saying that futures suggested a fall of 3.4% in the headline index.


The USDA, reporting that cash market values of whole milk powder prices in Oceania had fallen in late March, said that “sellers were not too surprised at the price contraction following recent significant… price increases.


“Some of the typical big WMP [whole milk powder] buyers had already stocked up in recent weeks. Many are believed to be stocked through the third quarter of 2021.”


‘Keep prices somewhat supported’

However, Mr Donnay, suggested that NZX futures were exaggerating the prospect of weakness at Tuesday’s auction, noting that in China, farmgate milk prices “ticked higher in the most recent week of data”, close to 4.30 yuan per kilogramme.


“Normally they would be dropping seasonally,” he said, flagging that prices typically fall from January to lows set in late June.


“It still looks like underlying demand inside of China is good and domestic production is on the weak side.”


Furthermore, “working inventories are likely getting low” in some other importing countries, which had stepped back from purchases during the latest price rally.


These nations “may step back into the market in coming months as well,” Mr Donnay said, adding that this demand “could help to keep prices somewhat supported”.

Related Stories

Milk price hopes get double upgrade, despite disappointing GDT auction

Both ASB and Westpac upgrade forecasts for New Zealand milk prices, even though dairy values underperformed at the latest benchmark auction

Carr's Group shares rise, as it reveals 'positive' trading, profits rise

The engineering-to-farm retail group sees tailwinds from a strategic review and reviving feed margins. But what about USDA forecasts for UK wheat in 2021-22?

Ghana cocoa 2020-21

Agrimoney Markets Extra’s running table of estimates for Ghana cocoa supplies in 2020-21 season

Ukraine corn 2021-22

Markets extra lists 2021-22 estimates for production and shipments in the top exporter of the grain outside the Americas
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© 2021 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of AgriBriefing Ltd
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069