Falls for most commodities were between 7%-10% with whole milk powder (WMP) down 9.6%. The thinly traded butter milk powder and rennet casein were down by 11.6% and 15.2% respectively but skim milk powder (SMP) had a smaller drop of 5.5%.
The drop in WMP prices was predicted by the NZX Dairy Futures market. The Futures market had predicted an 11% drop to $2835/t in the Contract 2 WMP price for Fonterra product and that was nearly fulfilled with that price falling to $2840/t. Ahead of the auction Fonterra increased the volume of WMP to be sold on GDT. It was the second time in a month Fonterra revised up its GDT forecast offerings after initally pulling volume off GDT in late January as dry conditions began to impede milk production.
AgriHQ dairy analyst Susan Kilsby said “The extra product available on GDT means buyers no longer sense that a shortage of milk powder will occur this season despite Fonterra holding its milk production forecast for the 2014-15 season at -3.3%. Just over 20,000 tonnes of product was traded on the latest GDT auction, 48% less than at the corresponding auction a year ago.”
SMP prices were down 5.5% overall but there were increases to most Contract 2 prices. There is obviously still some demand for nearer term supply but prices dropped away sharply for the later dated contracts.
