OMF NZ Dairy Futures Market report – October 29, 2013

• Milk remains firm• WMP curve remains in steep backwardation• Good luck Saputo – the battle is just beginning   Milk overall is firm.  Our WMP price remain elevated with November WMP settling at $5000.  The WMP curve also remains steep with $500 being the differential between November and April 2014.  Class III Milk in the U.S. also remains strong, closing at $18.75 and within a whisker of the March $18.95 high.  Class IV also remains elevated at UAS$20.20. The WMP curve also remains in steep backwardation with negative $500 being the differential between November and April 2014.  The same curve this time was in a positive $150 contango. It’s going to be hard for Saputo to secure Warrnambool Cheese in our view, given the resolve of the two large shareholders who are doing their best to thwart the Canadian processors entry into the Australasian market.  Murray Goulburn and Bega Cheese own 34% between them and given they have been outbidding Saputo along the way, the price will have to be much higher.