“The fall in prices at the GDT auction overnight combined with a weaker price outlook resulted in the reduction in the AgriHQ Seasonal Farmgate Milk Price,” AgriHQ dairy analyst Susan Kilbsy said.
Prices of dairy commodity futures trading on the NZX Dairy Futures market took a dive in the past fortnight as more volume was added to GDT. Whole milk powder (WMP) closed at US$2850/t yesterday which was down US$650 or 19% from a fortnight ago.
Ahead of the auction Fonterra increased the volume of WMP to be sold on GDT, the second time this month it revised up its GDT forecast offerings after initally pulling volume off GDT in late January as dry conditions began to impede milk production.
“The extra product available on GDT means buyers no longer sense that a shortage of milk powder will occur this season despite Fonterra holdings 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 same auction a year ago.”
The NZX Dairy Futures market correctly indicated WMP prices would fall by 11%.
Skim milk powder prices generally fell by 6% at the auction to an average price of $2731 although certain grades gained in price.
The anhydrous milk fat price fell 8% to US$3877/t while butter traded at an average price of US$3555/t, 9% down from the previous auction. Prices for cheddar and casein were down by 7% and 15% respectively.
