The GDT price index dropped a sliver, down 0.1% after increasing 0.3% in the first week of April.
Whole milk powder (WMP) prices rose 0.4% on average, which analysts say underpinned their previous milk price forecasts for 2021.
Their predictions sit within the range of $7.60/kg milksolids to $7.90, while Fonterra’s range is $7.30-$7.90.
After the extraordinary 20% boost in WMP prices at the first GDT auction of March, the market has settled around US$4100/tonne and the futures market expects prices to retreat by $200-$300/t over the next six months.
The 2022 dairy season is now receiving all the analytical attention.
Westpac’s senior agri-economist Nathan Penny has gone boldly where none of his counterparts have yet gone – a prediction of $8/kg for next season.
“We now expect global dairy prices to remain stronger for longer in this dairy price cycle,” Penny said.
“High grain prices, environmental constraints and competition for land and water from other industries will rein in the usual global milk supply response to very strong demand.
“We now expect dairy prices to start the 2022 season on the front foot.
“For example, the latest GDT results, along with the current NZ dollar rate against the US, would produce a milk price of $9/kg.”
Within his 75 cents forecast increase, Penny has factored a fall in WMP prices by 18%.
ASB has also lifted its 2022 forecast by 20c to $7.50, while BNZ sits on $7 and ANZ on $7.30.
ASB economist Nat Keall says the GDT contract curve now suggested that momentum would be retained into next season.
“In sum, dairy prices are holding most of their gains from earlier in the year and remain remarkably high,” Keall said.
ANZ agricultural economist Susan Kilsby says the lack of any strong moves in GDT prices last week bodes well for export returns and the farm gate milk prices.
The milk price futures market is trading at $7.48 for next season and $6.80 for the following season (2023).
Dairy farmers who use the futures market will be tempted to lock in the prices on offer to prolong $6-$8 returns for a sixth, perhaps seventh consecutive season.
