Friday, March 29, 2024

Farmgate forecast up but GDT static

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Mixed results at the overnight GlobalDairyTrade auction lifted the AgriHQ farmgate milk price even though whole milk powder prices fell.
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The AgriHQ milk price for this season rose 12 cents to $4.75/kg MS on the back of stronger dairy commodities futures prices. Fonterra’s latest forecast was $4.25/kg MS.

In the past fortnight WMP futures prices crept up which drove the lift in the AgriHQ price.

“The GDT result indicates the market is still weak, which is a concern as offer volumes are forecast to lift in the coming months as more new season product is offered,” AgriHQ dairy analyst Susan Kilsby said.

“In the current environment it is difficult to see prices moving substantially higher before the end of the year.”

The volume of product on offer overnight was similar to the previous event and left the overall GDT price index unchanged. A total of 23,089t of product traded. It was shared between 114 successful bidders.

“Businesses participating at the National Fieldays will be disappointed with last night’s results, which will have done little to boost industry confidence,” Kilsby said.

“Dairy farmers will be using Fieldays as an opportunity to hunt down a bargain but spending is expected to be limited as farmers keep a firm lid on costs.”

Some firmer prices were achieved at the auction. Skim milk powder (SMP) recorded another price lift, up 1.5%, but was still trading at a discount to WMP.

The price indices for butter and anhydrous milk fat lifted by 5.3% and 4.4% respectively. Cheddar prices also recorded a decent lift with the cheese price index up 6.9%.

Milk price futures trading on the NZX Dairy Derivatives market were priced at $4.50/kg MS for the September 2017 contract and $5.60/kg MS for the September 2018 contract.

The AgriHQ Snapshot milk price dropped 31c to $3.91/kg MS on the weak whole milk powder prices and the stronger NZ dollar.

The snapshot milk price indicates what the farmgate milk price would be if all the season’s product was sold at June 15 GDT prices and at the current exchange rate.

The WMP price has a greater impact on the milk price than the other dairy commodities.

AgriHQ is running milk price futures seminars daily at the Fieldays, site M30.

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