But though most dairy commodity prices firmed overnight, whole milk powder was down 1.7%.
The AgriHQ Snapshot milk price lifted 12c to $4.21 a kilogram of milksolids because of the weaker New Zealand dollar. It indicates what the farmgate milk price would be if all this season’s product was sold at June 1 GDT prices and at the current exchange rate.
The AgriHQ seasonal milk price forecasts each lost 1c.
The AgriHQ 2015-16 forecast now sits at $4.10/kg MS while the AgriHQ 2016-17 milk price is at $4.63/kg MS.
Fonterra’s prices are $3.90/kg MS for last season and $4.25/kg MS for this season.
“The weaker WMP price is likely to have been driven by the larger volumes on offer at this event combined with ongoing weakness in demand,” AgriHQ dairy analyst Susan Kilsby said.
Fonterra offered 10,712 tonnes of WMP overnight, nearly twice the volume on offer at the previous event.
Skim milk powder recorded a strong price lift, up 12.1%, but it continued to trade at a discount to WMP.
The GDT price for SMP was still below the European intervention price at which the central government has been buying excess milk powder.
The direction the market took at last night’s auction was largely anticipated by the NZX Dairy Derivatives market.
The market was expecting WMP to be down while it was picking a lift in the price of SMP, butter and anhydrous milk fat.
Milk price futures began trading on the NZX Dairy Derivatives market at the end of last week. The September 2017 contract, which relates to the 2016-17 dairy season, last traded at $4.50/kg MS, 25c above Fonterra’s current forecast .
The September 2018 contract, for the 2017-18 season, traded several times at $5.60/kg MS.
Open interest in the milk price futures contracts stands at 66,000kg MS.
“Overall, the dairy commodity market is currently tracking in the right direction but prices are going to take some time to recover to a level where dairy farmers can turn a profit,” Kilsby said.
The average NZ dairy farmer needs a milk price of about $5.20/kg MS to break even.
Aside from WMP the only other commodity to drop in price at the GDT auction was rennet casein, down 1.6%.
The SMP price index was up 12.1% but the commodity to record the biggest price gain was butter milk powder which lifted 14.2%.
Cheddar performed well gaining 7.8% to trade at an average price of US$2669/t because of strong demand for product for next month delivery.
The milk fat based products both recorded strong gains with the butter index up 3.2% and the AMF index gaining 2.8%. Lactose was up 4.7%.
