The GDT price index gained 2.6% last night.
The AgriHQ forecast for this season was unchanged at $4.11/kg MS because the small lift in dairy commodity prices was offset by lower futures prices.
The prices of dairy commodity futures trading on the NZX Dairy Derivatives market dropped back after the previous GDT but ahead of last night’s auction they indicated a positive GDT result could be expected.
Whole milk powder prices were slightly better than expected. The market anticipated a 2.8% rise in regular grade WMP with a July delivery date but the actual lift was 3.7%.
Dairy analyst Susan Kilsby said “The lift in WMP prices on GDT was supported by the low volumes of WMP on offer.”
The amount of WMP Fonterra made available was the lowest volume it had offered to the market in more than three years.
Fonterra expected to collect 1588 million kilograms of milksolids this season. That is 3% less milk than collected last season.
“Despite the reduced milk flows Fonterra has still been selling product at a similar rate to last season which has resulted in a reduction in stock levels” Kilsby said.
In a business update earlier this week Fonterra said its inventory on April 30 was 11% lower than at the same date last year as a result of strong sales with contracted rates.
“The GDT result last night was positive with the market now heading in the right direction but the result was off low volumes.
“Hopefully, the market can sustain this positive direction as offer volumes start to increase in the coming months.”
The WMP Price Index produced a positive result lifting 3%. The milk fat products were also strong performers with the butter index up 3.8% and the index for anhydrous milk fat gaining 4.9%.
Skim milk powder continued to face pressure as large quantities of it continued to enter storage programs in the European Union, which is keeping prices in check. The SMP price index dropped 0.9%.
Cheddar was also weaker dropping 0.8% – half of its gain from the previous auction.
Butter milk powder recorded the largest gain, up 16.2%, but volumes traded were low, causing prices to move around more than other products.
The rennet casein index was up 0.3% and lactose gained 3.9%.
