The upward move was driven by stronger futures prices for dairy commodities on the NZX Dairy Derivatives market, AgriHQ analyst Nick Handley said.
Yesterday Fonterra lifted its forecast by 50 cents to $5.25/kg MS
The small rise in prices at this week’s GlobalDairyTrade auction added just one cent to the milk price forecast, which was then lost by the continued strength of the dollar.
“Futures prices have continued to trend up since the September 6 GDT and spiked early this week just before the September 20 auction.
“Futures prices for both whole milk powder and skim milk powder fell yesterday while futures prices for anhydrous milk fat and butter lifted.
“However, the falls in milk powder futures prices have not dampened the gains of the previous couple of weeks and there is still strength in the market,” Handley said.
Since the AgriHQ milk price was last calculated after the September 6 GDT auction, futures prices for WMP had lifted between US$50/tonne and US$180/t.
The October contract for WMP settled at US$3000/t yesterday though it lost US$40/t in trading activity this morning.
However, that was still above the US$2760/t achieved for the C2 regular grade WMP contract at this week’s GDT.
Futures prices for SMP had lifted between US$60/t and US$235/t since the last GDT event.
Indicating the continued strength of fat products over the last few GDT events, futures prices for AMF had lifted the most between the last two auctions.
Futures contracts for AMF had lifted between US$150/t and US$375/t. The October contract for AMF settled at US$4980/t yesterday, slightly higher than the price achieved for C2 regular grade AMF at GDT. Butter futures prices gained between US$25/t and US$240/t.
“Fonterra’s lift to $5.25/kg MS for the 2016-17 season certainly supports a higher milk price for this season.
“Dairy commodity prices will need to continue performing for this to be achievable; however, fundamentals of the market are becoming more supportive.
“Milk supply continues to be on a downward trend in Europe as well as in New Zealand and Australia and demand has been reasonably stable,” Handley said.
The AgriHQ spot price, which indicated what the milk price would be if all of the season’s product traded at yesterday’s GDT prices and exchange rate, lifted 12c to $5.34/kg MS.
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