By Alexandria Winning-Browne, NZX dairy analyst
Global Dairy Trade (GDT) 327 resulted in an easing of the GDT price index, down 0.7% with an average price achieved of US$3403/t. This auction was unexpected, with lifts anticipated for all major commodities ahead of time. Only whole milk powder (WMP) actually experienced one, albeit just 0.2%. Event 327 saw decreased demand and volumes sold off of every commodity on offer, with quantity sold having only just exceeded the minimum supply figure. North Asia took out top buying spot, but it was pullback from major demand movers the Middle East, southeast Asia and Europe that influenced price declines.
Milk powders had a relatively subdued event. WMP increased a slight 0.2% to an average of US$3,277/t. WMP was sold in contracts one through five, with prices lifting for nearer dated contracts – one, two and three and falling for contracts four and five. Prices moved between -1.1% in C5 to +0.4% in C1. Prices still remain in a forward lifting curve, with C1 at US$3267/t and C5 at US$3343/t. Bidding demand started off a little stronger than the last event with a supply demand ratio at 2.5. However, the gap closed pretty quickly, dropping below 1.25 by round eight.
The skim milk powder (SMP) price index eased 1.1% at this week’s auction to an average of US$2,739/t. The C2 contract for medium heat SMP fell below C1, and is also US$110/t below where the Derivatives market had pegged SMP for March. However the range between contracts remains tight for New Zealand product – only US$60/t between the lowest priced contract and the highest priced contract. EU SMP sold in C2 and US SMP in C3. NZ medium heat product commanded a premium over both, $46/t over the European Union product and $56/t over the United States product.
Anhydrous milkfat (AMF) prices declined for the second event in a row, down 1.8% to finish the auction at US$5340/t. Prices were down across all contract periods offered, ranging from -1.4% in C3 to -2.8% in C5.The C2 premium AMF contract sold US$174/t below where the Derivatives market has been pricing the March contract.
Butter prices eased a mere 0.3% to an average price of US$4899/t. Butter has a similar forward curve to SMP and AMF – down between C1 and C2, but lifting from there on. The C2 unsalted butter contract sold US$185/t lower than where the Derivatives market had the March butter futures contract ahead of the event.
Cheddar prices took the biggest hit at 327, plunging 10.2% to an average price of US$4509/t, easing nearly US$500/t on average with the commodity’s lowest price since mid-2021. Product was sold in contracts one through four, with prices down between 7.8% for C2 and 13.6% for C4. Constant big buyers for the commodity, the Middle East, were nonexistent at this auction, with volumes being split between southeast Asia and north Asia only, pulling demand significantly lower. However this move does align the NZ price with where EU and US cheddar prices have been recently.
From a regional buying perspective, China has again dominated the auction, again purchasing the most WMP, SMP, and butter. While this was the case, they did little to influence demand, with most other regions purchasing less product than at the equivalent event last year and the last event, pulling prices and demand lower.
Dairy commodities eased slightly at the latest GDT event, while prices for dairy commodity futures trading on the SGX-NZX Dairy Derivatives market have also eased. However the relative resilience of whole milk powder and the time of the season has meant that the NZX milk price forecast hasn’t been very impacted.
The NZX Milk Price forecast has eased just one cent to $8.56/kg MS. The range is $8.50- $8.65/kg MS. This forecast includes off GDT sales adding circa four cents to the forecast, and our FX rate remaining at 0.6325 NZD:USD.