Whole milk powder was up 3.2% to US$ 3423 though that was less than the 5.8% predicted by analysts yesterday based on the latest trades on the futures market.
The biggest rise, 13.3%, was for butter milk powder sold at US$2623 followed by cheddar, up 11% to US$3697, skim milk powder 9.8% to US$2562, lactose 4.6% to US$787, anhydrous milk fat 4.4% to US$5348, butter 1.1% to US$4193 and rennet casein up 0.6% to US$6040.
There were 106 winning bis for the 23,902 tonnes of products sold.
TheNZX Dairy Derivatives market had predicted a 5.8% lift in the price of regular grade NZ WMP with a January shipping date. The market expectations were close but slightly on the high side with that grade lifting by 4.8% to US$3410/t.
The delivery contract for December shipping eased back 4.7% but was still priced above most of the other delivery periods.
At the previous auction the price for the December delivery was considerably higher than the other contracts indicating the need of some buyers to secure product for urgent delivery.
“Tightening milk supplies in both New Zealand and Australia have put pressure on suppliers with some dairy companies struggling to meet contracted delivery times,” AgriHQ dairy analyst Susan Kilsby said.
That left a few buyers with low supplies on hand, putting some urgency into the market.
The highest priced grade of WMP traded last night was UHT grade product for May 2017 delivery, which was priced at US$3615/t.
“In general the forward prices curve for GDT product is pretty flat with just a US$255 price differential between the highest and lowest priced product traded last night,” Kilsby said.
Skim milk powder recorded a surprisingly strong lift.
“While this price is still well below the WMP price it is surprising to see such a strong lift in SMP given the availability of this product throughout the world.” The NZX Dairy Derivatives market had factored in a lift of 4.3% in the price of C2 medium-heat, NZ-sourced SMP but it lifted 11.2%.
Fonterra-supplied SMP achieved a good premium over similar product supplied by European dairy company Arla.
Medium-heat, regular SMP from Germany and Britain was priced at US$2185/t compared to medium-heat NZ product traded at US$2580/t for the same delivery period.
“The tightening of supply in NZ is most likely the reason why NZ product was priced higher than the European product,” Kilsby said.
“Some buyers do not have the ability to or don't want to switch product between origins.”
SMP was also priced the highest for the nearby delivery contract but the greatest lift in price was for shipping dates in February and March.
AMF was now looking expensive compared to butter when considered on a milk fat content basis. Butter prices lifted the most in the later delivery periods but prices were quite flat across the board for it.
AMF prices, like butter, made the greatest gains in the later delivery periods, which effectively smoothed prices out across the delivery periods.
The auction ran to 18 rounds, indicating strong competition between buyers in some categories, Kilsby said.
