The AgriHQ Snapshot Farmgate Milk Price indicates that if the latest GlobalDairyTrade prices were achieved across the entire season this would equate to a milk price of $3.90/kgMS, a 25c increase from the previous auction. This increase was driven by higher GDT prices for whole milk powder, and milkfat products but was partially offset by a fall in skim milk powder prices.
AgriHQ dairy analyst Susan Kilsby commented: “The final GDT event for 2015 resulted in the GDT Price Index moving up 2.3% and this was reflected in the 25c increase in the AgriHQ Snapshot Farmgate Milk Price. But as prices on the NZX Dairy Futures market have receded in the past fortnight our forecast for the entire season has actually dropped by 5c
Source: GlobalDairyTrade
“It is too early to say whether this positive price trend delivered by GDT will continue into 2015. Fonterra factored in a steady increase in dairy commodity prices into its $4.70/kgMS milk price, therefore prices need to keep moving higher if this price is to be achieved. Fonterra’s forecast assumes that whole milk powder will be trading above $3,000/tonne by April 2015. At present the April 2015 NZX whole milk powder futures are only valued at $2500” commented Susan Kilsby
Fonterra has offered lower volumes of dairy products on GDT this season than they have in previous seasons. Ahead of the latest auction they reduced the volume of whole milk powder on offer particularly for the contracts with the nearer delivery dates. The auction results indicate that the lower volumes offered were more closely aligned with buyer demand.
Last week Fonterra also advised the market that they now only expect to collect the same volume of milk which they did in the 2013-14 season. As Fonterra’s milk intakes from June to November 2015 were 4% up then milk intakes will need to fall by at least this amount in the second half of the season. This message that milk supply is expected to tighten may have also prompted some additional buyer activity at this auction.
