{"id":57616,"date":"2023-02-09T14:05:43","date_gmt":"2023-02-09T01:05:43","guid":{"rendered":"https:\/\/www.farmersweekly.co.nz\/?p=57616"},"modified":"2023-02-09T14:06:27","modified_gmt":"2023-02-09T01:06:27","slug":"gdt-jump-as-china-emerges-from-lockdown","status":"publish","type":"post","link":"https:\/\/www.farmersweekly.co.nz\/markets\/gdt-jump-as-china-emerges-from-lockdown\/","title":{"rendered":"GDT jump as China emerges from lockdown"},"content":{"rendered":"Reading Time: <\/span> 2<\/span> minutes<\/span><\/span>\n

Global Dairy Trade prices rose 3.2% in the first February auction, the biggest positive move for dairy commodities (taonga miraka kau) since September last year.<\/p>\n\n\n\n

Commentators said the re-opening of the giant China market boosted butter by 6.6%, anhydrous milk fat by 4.8% and the key whole milk powder prices by 3.8%.<\/p>\n\n\n\n

NZX dairy insights manager Stuart Davison said the forward sales curve for whole milk powder has lifted and Chinese buyers took nearly two-thirds of the WMP volume sold.<\/p>\n\n\n\n

This suggests that dairy prices will recover through the tail end of the New Zealand dairy season and start the 2024 season stronger than today\u2019s prices.<\/p>\n\n\n\n

Westpac senior agri economist Nathan Penny said the likely catalyst for the GDT price rise<\/strong><\/a> is rebounding Chinese demand after the lifting of the zero-covid policy<\/a>.<\/p>\n\n\n\n

\u201cWith Chinese consumers now largely free to move about and return to restaurants, caf\u00e9s and bakeries, we anticipated that products like butter would benefit most from looser covid restrictions,\u201d Penny said.<\/p>\n\n\n\n

\u201cOver coming months, we expect prices to gain further momentum as Chinese demand continues to rebound.<\/p>\n\n\n\n

\u201cFor example, we forecast the Chinese economy to grow by 6% in 2023 from 3.5% in 2022 and for strengthening household spending to be a key driver of economic growth over the year.\u201d<\/p>\n\n\n\n

Penny has a $8.75\/kg milksolids price prediction for the current season and $10 for next season.<\/p>\n\n\n\n

ANZ agri economist Susan Kilsby has taken a slightly contrary view, reducing her farmgate milk price forecasts by 25c to $8.50 and $8.75 respectively for the two seasons.<\/p>\n\n\n\n

The strengthening NZ dollar against the United States dollar is a big influence on her forecasts.<\/p>\n\n\n\n

\u201cDespite the lift at this week\u2019s auction, recent movements in both dairy commodity prices and the exchange rate have been largely unfavourable for farm gate prices,\u201d Kilsby said.<\/p>\n\n\n\n

\u201cWhile we expect dairy commodity prices to gradually recover, we also expect the NZD to appreciate further.\u201d<\/p>\n\n\n\n

The early February lift in GDT prices would instil some confidence in the market and Kilsby expects modest price rises through the rest of the season.<\/p>\n\n\n\n

Chinese demand for WMP does appear to be building but that market does not seem to be short of product currently.<\/p>\n\n\n\n

ASB analyst Nat Keall said the lift in GDT prices supports his milk price forecast of $8.65.<\/p>\n\n\n\n

\u201cWe still expect dairy prices to ease over the medium term as global growth slows and retain our $7.00 milk price forecast for 2023-24.<\/p>\n\n\n\n

\u201cThere is a high degree of uncertainty about the 2024 forecast but farmers have paid down a chunk of debt and will begin next season in resilient shape.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Biggest positive move for dairy commodities since September.\n","protected":false},"author":22,"featured_media":29119,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_FSMCFIC_featured_image_caption":"","_FSMCFIC_featured_image_nocaption":"","_FSMCFIC_featured_image_hide":"","footnotes":""},"categories":[2],"tags":[28,55],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t