Friday, March 29, 2024

GDT index tumbles 9.3%

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The GlobalDairyTrade index fell another 9.3% overnight with many products failing to move from their opening prices.
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Average prices fell 12.8%.

Fonterra sets opening prices at 15% below prices at the previous auction.

The result took 90 cents off the AgriHQ 2015-16 Farmgate Milk Price, leaving it languishing at $3.34/kg milksolids.

Fonterra’s 2015-16 farmgate milk price forecast still sits at $5.25/kg MS but it is expected to slash that on Friday.

“Farmers now face two consecutive seasons of extremely low milk prices. Very few farmers will be able to turn a profit at such a low milk price,” AgriHQ dairy analyst Susan Kilsby said.

“A $1/kg MS drop in the milk price equates to about $2 billion less income for dairy farmers.”

The published average sale price was just US$1815/tonne but much of the product sold below that price.

“Many of the products offered by Fonterra sold at their opening prices.

“This indicates there was not sufficient demand from buyers to match the larger quantities of product offered,” Kilsby said.

The volume of whole milk powder offered was 78% greater than at the previous auction.

“Clearing the greater volume of product offered was always going to be a challenge in today’s weak market.

“However, it is still very disappointing that many prices didn’t move above their opening levels.

 “The NZX Futures market anticipated whole milk powder (WMP) prices would fall but not by the degree that they did.

“Yesterday the NZX Futures market indicated we might see firmer prices for some products such as skim milk powder (SMP) but that did not play out in the GDT auction,” she said.

Futures prices had dropped sharply following the previous GDT event and that was the biggest driver of the latest decline in the AgriHQ Milk Price .

The WMP Price Index fell by 10.3%. The specific grade of WMP the NZX Dairy Futures contracts settle against fell 15% to US$1450/t. Fonterra offered 28,050t of WMP at the auction.

The AgriHQ Snapshot Farmgate Milk Price, which sets a seasonal price based only on the latest results, decreased by 68c to $2.49/kg MS.

The lower New Zealand dollar did little to offset the sharp drop in the auction prices.

GDT Price Indexes were down for virtually all products traded.

WMP declined by 10.3%. Skim milk powder was also considerably weaker, down 14.4%. Butter and anhydrous milk fat fell by 6.1% and 11.7% respectively. Lactose was unchanged. Cheddar was the only commodity to post a gain, up 0.2%.

 
AgriHQ Farmgate Milk Price Calculator

Our dairy tool helps you understand the relationship between the farmgate milk price and its key influences. Toggle between the snapshot and seasonal calculator to help you see what could lie ahead. 

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