The Global Dairy Trade price index fell for the fifth consecutive time on July 21, down 1% on the previous fortnightly auction in early July.
The GDT index has not moved upwards since May 2 and the cumulative downward trend prompted ANZ agricultural economist Susan Kilsby to reduce her farmgate milk price forecast for the new season by 50c to $7.75/kg milk solids.
“Global demand for dairy products has been impacted by deteriorating economic conditions affecting consumer demand,” she said.
Within the GDT index movements, whole milk powder price fell 1.5%, skim milk powder prices were down 0.6%, butter down 2.7% and cheddar fell a whopping 10%.
Only anhydrous milk fat rose, by 3.4%.
NZX dairy analyst Alex Winning said the GDT price index is now at its lowest level since September 2020.
“Buyers are getting what they need but aren’t willing to pay more than they need to.
“No one is stocking up in fear they won’t be able to get products in a few months’ time,” Winning said.
Westpac senior agri economist Nathan Penny said dairy prices are on a slippery slope and pose clear downside risk to his milk price forecast of $8.90, which is now under review.
He blamed the unexpectedly sluggish Chinese economy and said Westpac has made significant downward revisions to its China GDP predictions.
ASB economist Nat Keall said Chinese purchasing remains weak and slightly better supply of dairy commodities and significantly weaker demand is a recipe for a lower milk price.
ASB is forecasting $7.25.