Whole milk powder prices dropped a relatively minor 1.5% and skim milk powder was down 4%.
The dairy commodities market has fallen 4.5% since the beginning of May after a sustained run of increases between November and April totalling 28%.
During that uplift WMP rose from US$2600 a tonne to $3300 and has since fallen over the past five fortnightly auctions to $3138.
ASB senior rural economist Nathan Penny said the recent retreat in WMP prices is not material in his forecast of a $7/kg farmgate milk price in the new season because only small powder quantities were being sold.
“How prices fare during the spring flush will be the next key test.
“We continue to expect dairy prices to move towards a cyclical peak later in the year.”
Westpac senior economist Anne Boniface said WMP prices remain comfortably above the US$3000 level and she is slightly more optimistic than Fonterra’s $6.25-$7.25/kg forecast.
Differing from the ASB outlook, Westpac expects prices to soften modestly over the second half of the year as global supply increases a little.
“Some further weakening in the NZ dollar should help, however, there is a long way to go before milk prices are finalised in September next year.”
Milk price futures are trading at $6.85, having fallen a little from $7, Boniface said.
Penny said the falls in butter and AMF prices suggest an easing in global milk fat markets, which had been growing strongly over the past six months.
“The sudden slowdown in NZ production given the hot and dry summer weather had previously put the squeeze on milk fat markets.
“The latest GDT result suggests some pullback.”
Butter has been volatile, sliding from US$5500 this time last year to a low of $3600 in November before gaining 50% in price to $5500 again in April and falling to $4800 now.
Statistics NZ said dairy exports set a new record in rising 19% by volume in the March quarter and 9.5% by revenue.
The previous quarterly volume record was in 2012.
