The result pushed the AgriHQ Farmgate Milk Price up 46 cents to $4.65 a kilogram of milksolids.
Fonterra’s 2015-16 milk price forecast is $3.85/kg MS.
“The large increase in the AgriHQ 2015-16 Farmgate Milk Price is primarily due market expectations that prices will continue to firm throughout the rest of the season,” AgriHQ dairy analyst Susan Kilsby said.
The NZX Dairy Derivatives market indicated whole milk powder (WMP) prices would increase a further 11% by the end of the season. That had been factored into the AgriHQ 2015-16 Farmgate Milk Price.
“The NZX Dairy Derivatives market predicted prices would rise overnight but the scale of the increase exceeded expectations,” Kilsby said.
The volume of WMP offered was 5% lower than at the previous auction and 43% less than at the corresponding auction a year ago.
“The lower volumes of product offered on GDT along with expectations that New Zealand milk production will fall this season are the factors pushing prices higher.”
“Buyers are aware that a drier than normal El Nino summer will slow milk output in NZ, therefore, we are starting to see a little more urgency from buyers wishing to secure purchases.”
Skim milk powder prices firmed with some of the product trading above the European Union’s SMP intervention price.
GDT Price Indexes were up for all products traded except butter milk powder which eased after a strong rise at the previous auction.
WMP gained a massive 20.6%, AMF and butter gained 13.7% and 13.3% respectively, cheddar gained 10.7% and lactose was up 3.1%.
