AgriHQ Farmgate Milk Price moving in the right direction

AgriHQ dairy analyst Susan Kilsby commented, “The lift in the AgriHQ 2015-16 Farmgate Milk Price was driven up by both the lift in GDT prices and a stronger outlook for dairy commodity prices for the remainder of the season.”

Whole milk powder (WMP) prices made considerable gains on the NZX Dairy Futures market over the past fortnight with the nearby WMP contract lifting 8%.

“It was fantastic to see the positive sentiment seen in the NZX Futures market also flow into the GDT prices“commented Kilsby.

The GDT Price Index gained 3.6% at the December 1 event with the average sales price increasing to US$2419/t.

The later dated WMP contracts traded at a premium over the nearby contracts at the auction. A similar upward sloping forward price curve can be seen in the NZX WMP Futures market. The NZX market indicates that by July 2016 WMP prices should lift to US$2700/t.

“The AgriHQ 2015-16 milk price is still trailing Fonterra’s current milk price forecast of $4.60/kgMS. Therefore we do not yet see any opportunity for Fonterra to increase its milk price forecast despite the improvement in market sentiment.”

“Whilst we have seen a solid lift in prices at this auction, market fundamentals still remain weak due to the sheer volume of milk that is being produced across the globe. Therefore any recovery in prices is likely to occur slowly.” 

GDT Price Indexes lifted for most product offered. The Butter Price Index showed the largest gain up 5.7%. The price index for WMP, which accounts for the largest sales quantities, lifted 5.3% while SMP gained 3.2%. The GDT price index for Anhydrous milkfat (AMF) gained 2.3% and the Lactose Price Index gained 1.7%. However weaker prices were recorded for cheddar, rennet casein and butter milk powder. The Cheddar Price Index dropped 1.5% and the Rennet Casein Price Index lost 4.3%. The largest fall in percentage terms was the Butter Milk Powder Index which dropped 5.6%.

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