Tuesday, February 27, 2024

GDT Pulse continues to confirm market direction

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Over the last three weeks, the SGX-NZX Dairy Derivatives market has pushed upwards.
The price retreat of WMP futures on the SGX-NZX Dairy Derivatives, the NZX Milk Price Forecast for the 2022-23 season has slipped 33c/kg MS.
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By Stuart Davison, NZX Dairy Insights Manager

The fourth Global Dairy Trade (GDT) Pulse auction resulted in an increase in the price of whole milk powder (WMP), with the only contract period sold, C2, lifting 4.4%, or US$150/t, from the previous GDT Pulse auction, to finish the auction at US$3565/t. The C2 WMP price has increased US$25/t from the C2 price achieved at GDT event 315.  

Again, demand was high, with nine winning bidders from 35 participants. The auction lasted nine rounds, taking 29 minutes; however, the maximum 1000mt was quiet, with only 965t sold. 

This Pulse auction outcome continues to reiterate market sentiment, with growing demand and an upwards direction for dairy commodities. 

Over the last three weeks, the SGX-NZX Dairy Derivatives market has pushed upwards, with anticipation for last week’s GDT event to solidify this market sentiment. This week, futures have continued to do so, with positive movements in every commodity on the exchange, as well as huge gains for milk price futures. 

WMP futures have pushed up a further 1.8-4.0% over the last week with contracts set for January through April now sitting just under US$4000/t. It’s the monthly increases that really show market confidence, however, with increases between 6-12% in the front eight contracts over the last month. 

Over the last month, the front eight contracts of SMP have jumped between 6.1-8.4%, while AMF contracts have increased between 6.0% and a massive 13.9%. 

Butter on the other hand, has moved between -1% to 5% while the market levels out what was a significant range across the eight contracts. 

Milk price futures are the big winner this month, with a massive $1.01/kg MS gain to $9.94/kg MS in the September 2023 contract. Next season has also jumped, up 90 cents for the month to $9.55/kg MS. 

As news of NZ milk production forecast revisions comes to light, these results are unsurprising. With the current milk supply constraints globally, buyers are paying for security of dairy.

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