The AgriHQ price fell eight cents to $4.06/kg milksolids (MS). Fonterra’s forecast is $3.90/kg MS.
The fall in the AgriHQ price was primarily driven by prices easing in the NZX dairy futures market over the past three weeks.
The recent lift in the New Zealand dollar had little impact on the AgriHQ forecast because most of the currency for the season will already be hedged, AgriHQ dairy analyst Susan Kilsby said.
However, the appreciating currency was the major driver behind the 14c drop in the AgriHQ Snapshot farmgate milk price – the price calculated using the latest GDT result over the whole season.
The average price achieved overnight was almost on par with the previous auction though the headline GDT Price Index gained 2.1%.
Gains in whole milk powder and anhydrous milk fat prices were offset by decreases in butter and butter milk powder. Skim milk powder pricing was virtually stable.
Higher prices were also recorded for cheese and rennet casein but those commodities are not used in Fonterra’s milk price calculation.
“It was a pleasant surprise to see some prices lift on the GDT auction overnight as there is not a lot of positivity in the market,” Kilsby said.
“In Europe product continues to flood into the government-backed intervention programmes as milk production continues to expand.
“The majority of Europe’s extra milk is being made into SMP and butter which will keep prices for those commodities subdued for some time.
“However, the price of WMP and AMF is less influenced by the European market.
“A decrease in NZ’s milk supply will provide some support to the price of those two commodities.”
The GDT price index for WMP gained 1.5% while the AMF gained 6.7%.
Other commodities to show strong lifts were cheddar at 10.5% and rennet casein at 11.8%.
The butter index lost 2% and butter milk powder was down 8.2%. SMP gained just 0.1%. Lactose prices have also started to lift after a prolonged period of low prices with the price index gaining 6.2%.
“But as NZ imports lactose to use in blended dairy products a lift in the lactose price is not good for our farmers,” Kilsby said.
