Whole milk powder fell to US$2797/tonne, having lost about $500 since its recent peak in December.
Skim milk powder has lost a similar amount but butter has held firm above $4000, where it has been for the past six months.
ASB senior rural economist Nathan Penny said the fall in GDT prices prompted him to trim 10c from his milk price forecast, now $7.30, though that should not be a worry for farmers.
“We anticipate that our dairy and food exports are going to hold up relatively well,” he said.
“We anticipate that global food demand is likely to remain firm as food consumption is prioritised in household budgets.”
The dollar has fallen from US67c at the start of the year to 58c last week. When that is fully reflected, the farmgate dairy price will benefit by about $1/kg.
However, Fonterra’s hedging programme means the lower NZD will not kick in until next season.
People still need food and they are moving quickly to quality and trusted sources, Synlait chief executive Leon Clement said.
In the latest GDT event milk powders were down about 4% and fat products were quite stable.
“Early signs are that dairy products will be remarkably resilient.”
Westpac strategy head Imre Speizer said dairy’s weighted average price fall of 13% since January compares very favourably with sugar down 31%, wheat down 17%, lumber down 30% and Brent crude oil down 59%.
Rabobank dairy analyst Emma Higgins said China’s demand recovered somewhat in the latest GDT auction though it was not back to historical levels and she expects a 19% fall in dairy import volume for 2020.
“Rabobank expects pressure on dairy prices to persist over the coming months with rising dairy surpluses in export regions also helping to keep a lid on global markets through the coming months.”
Rabobank’s farmgate milk price forecast was trimmed 25c to sit at $7.35.
