Dairy commodity prices took another hit at last night’s Global Dairy Trade auction with the index down 5%.
Skim milk powder saw the biggest fall at 8.6%, while whole milk powder dropped 5.1%.
Anhydrous milk fat (2.1%), butter (2.1%) and cheddar (2%) also dropped in price.
NZX dairy insights manager Stu Davison says the result wasn’t a surprise as every indicator over the past fortnight signalled a serious slide or correction was likely.
“Extra volumes on the GDT platform and expectations of market pressures on end consumers have created a market that expected – almost needed – prices to fall significantly lower.”
He said it was notable that key market participants were still at the auction, but with very different buying habits to that of six months ago.
“North Asian buyers were still very present in total numbers but on average secured smaller volumes per buyer. African buyers being hesitant, or almost inactive, in most product categories is an interesting dynamic, which has been building over the last handful of auctions, but speaks to the expectations from buyers that prices need to recede for greater participation.”
Davison said while it was an unsurprising auction it will be hard for New Zealand farmers to swallow at this point in the season.
“But [it will be] welcomed by commodity buyers in the midst of an unsure market.
“This correction has been required from the buy side of the market to ensure that future pipelines of products aren’t a greater potential burden than is currently expected.
“Leaning back on fundamentals and trying to find some optimism, it could be expected that prices will start to find support at these levels soon and look to track higher again into peak NZ milk on the back of more agreeable prices for the wider market.”
