World dairy prices stayed in place in the latest Global Dairy Trade auction, but experienced forecaster Nathan Penny believes China’s economic recovery will lead to a swift rebound in dairy demand.
Westpac senior agri economist Penny said the abrupt end to China’s covid restrictions had set consumers free to move about, particularly to restaurants and cafes.
“After losing 2.9% over January as a whole, we expect GDP prices to rebound over the next month or two.
“The Lunar New Year and existing stock levels may muddy the waters in the short term, but beyond that we expect underlying Chinese demand to lift.
“With that in mind, from around late February or early March we should have a clearer indication of whether our view holds either way.”
The Global Dairy Trade price index fell 0.1% in the second January auction, following minus 2.8% on January 3.
Cheddar jumped 4% and whole milk powder prices were up 0.1%.
Prices fell for the other three products offered: anhydrous milk fat down 0.9%, butter down 0.6% and skim milk powder down 0.3%.
NZX dairy analyst Amy Castleton said the latest GDT was a lack-lustre affair with very little movement in prices compared with the previous auction.
“No-one is sure if China will show up much on the demand front and I am not sure this auction clarified that much.
“It is Lunar New Year so some of the buyers may have been on holiday.
“The dairy market doesn’t have much direction at present and it will take time (and a bit more data) for that direction to be evident.”
