Friday, March 29, 2024

GDT fall defies market signals

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A fall in the overnight GlobalDairyTrade auction was offset by a lift in NZX Dairy Futures prices and a weaker dollar to leave the AgriHQ forecast farmgate milk price unchanged at $4.14/kg MS.
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Fonterra’s forecast is $3.90/kg MS.

GDT delivered lower prices for virtually all commodities traded with weaker prices for both milk powders and fat-based products.

“The large volume of milk being produced around the world, particularly in Europe, continues to put pressure on the markets,” AgriHQ dairy analyst Susan Kilsby said.

“For any substantial improvement in prices to occur we first need to see a reduction in milk production.

“The NZX Dairy Futures market has previously been a good barometer of market sentiment but despite futures prices softening in the past few days this market was factoring in a lift in GDT prices.”

The GDT Price Index for whole milk powder retreated by 0.8% while the index for skim milk powder came back 2.5%.

“It is likely that we will continue to see weakness in SMP prices in the coming months.

“Stocks of SMP are building in Europe.

“Earlier this week the European Commission announced a range of measures designed to support its dairy farmers.

“The support mechanisms will distort market signals and therefore European farmers are likely to continue to produce more milk than the market requires,” she said.

The GDT Price Index fell 2.9% with the average sales price falling US$63 to US$2190/t.

Prices were down for all commodities except butter milk powder and lactose. The BMP Price Index lifted 6.4% although prices for this commodity were still relatively weak. Lactose was up 0.8%.

The Cheddar Price Index lost 5.6% and prices for milk fat-based products were also weak. The Butter Price Index was down 2.8% while the index for anhydrous milk fat dropped 6.5%.

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