Prices at the Global Dairy Trade auction fell for the eighth time in a row, falling 1% in its latest auction with the average sign price at US$3784 per tonne.
Analysts at the NZX said this event was a little different to the last seven, however, with prices increasing for every commodity except whole milk powder (WMP) and lactose.
The WMP price index fell another 3.8%, dropping the average WMP price to US$3598 per tonne.
Fonterra has diverted almost an entire auction’s worth of whole milk powder away from the auction, leading analysts to speculate on the supportive effect this would have on prices before the auction.
NZX’s Stu Davidson said the expectation that the second volume removal of WMP would prop prices up didn’t eventuate, for the second auction in a row.
“It almost seems that the volume removed has removed an aggressive bidder at GDT auctions as well.”
Jarden head of derivatives Mike McIntyre said removing volumes ahead of an action would typically be supportive of price, however the subsequent GDT result fell.
“We are now within $10 of wiping off all the good work done in the early March auction.
“Support from the all-important Chinese market was more in line with longer run historical averages than the lofty heights achieved in previous 15 months, and that will likely be a concern for the market.
“It’s still early days from a collection standpoint so we will not get a good enough read on how things are going to play out until we start getting into the auctions that coincide with deliveries into the FTA safeguard window.”
He views the next three to four auctions as key in deciding just how this successful this season is likely to play out from a milk price perspective.
BusinessDesk and staff reporters
