OMF New Zealand Dairy Futures report – October 16, 2013

GDT finally gives up some gains  We finally saw a correction in milk prices overnight with the latest GDT result showing a fall of 1.9% in the GDT TWI.  The fall in WMP was 2.9% and we are seeing lower prices being reflected in the futures market across the curve.  It’s worth pointing out that prices are still elevated and in reality, we are just back to where we were prior to this latest GDT.  The curve in WMP is still in steep backwardation. Prices may continue to moderate here now we have seen a correction.  We don’t expect prices to crash and nor do we say this signals the end of the run.  It’s simply an overdue correction.  There is still considerable difference between GDT and WMP and in particular SMP.  We will highlight more about this tomorrow but there is a very big opportunity to buy below GDT prices. Click here to view the full report.