Thursday, March 28, 2024

No GDT move is good news

Avatar photo
An almost flat result in the latest Global Dairy Trade (GDT) auction was well received, Jarden head of derivatives Mike McIntyre says.
Reading Time: 2 minutes

“The market was pricing in an unwind of the 15% gain seen a little more than a month ago, and instead more widespread support saw a modest, almost unchanged result,” McIntyre said.

The GDT index rose 0.3% and whole milk powder (WMP) prices stayed steady on their level of three weeks ago.

Butter and anhydrous milk fat prices rose 2% and 0.8% respectively, and butter milk powder jumped 17.6%.

Cheddar was up 2.2% and skim milk powder (SMP) 0.6%.

On the downside, low-value lactose dropped 6.5%.

McIntyre says this was a period where processors were crunching their numbers for an opening milk price forecast for the season ahead.

“A result like this latest GDT will provide further optimism that we are in line for yet another positive start to the year,” he said.

Rabobank’s senior dairy analyst Emma Higgins says larger volumes of milk powders were offered and buying appetite was stronger than at this time in previous years.

SMP at US$3367/tonne is the highest it has been since 2014 and WMP stayed steady over $4000 for all grades and contract periods.

Westpac’s senior agri-economist Nathan Penny says the futures market was pointing at a 5% fall in prices for WMP, so the flat result was good news.

Westpac was sticking with its $7.90/kg milksolids forecast for the current season and $7.25 for next season.

Penny says strong recent dairy prices and a pullback of the NZ dollar against the US dollar gave some upside risk to next season’s forecast.

ASB economist Nat Keall says longer-dated contracts for WMP were up around $4200, and that was a sign of price momentum coming into the new season.

“With the contract curve relatively flat and buyers from regions other than China re-entering the market, the odds are against a sharp correction, but we see prices easing further over the next auctions,” Keall said.

“Still, strong post-pandemic global demand and softer Northern Hemisphere production should keep them from falling too far.”

Total
0
Shares
People are also reading