The latest Global Dairy Trade auction’s 1.9% index increase overall contained a 5.8% lift for AMF and 2.4% for butter.
Other increases included 4.4% for cheddar, 3% for skim milk powder and 0.2% for whole milk powder.
On the down side were lactose minus 3.5% and rennet casein minus 6.1%.
ASB rural economist Nathan Penny said the combination of good GDT prices and the weaker NZD had pushed dairy prices in NZD terms to their highest level this year.
Penny will revise his forecast farmgate milk prices for this and next seasons when Fonterra makes its first 2018-19 prediction next week.
“There is clear potential for our forecasts to move higher.
“While the sharp move in the NZD could partially reverse we are more confident that butter prices will rise further and potentially take other key dairy prices like whole milk powder with it.”
Westpac senior economist Anne Boniface said the $6.55/kg milk price is now expected to remain firm until the final wash-up.
Her own prediction for the new season is $6.40, the third consecutive season of $6-plus payouts, emphasising the stability of dairy prices.
For the past 18 months the GDT price index has moved within a band from 935 to 1096 or a deviation around the 1000 level of plus 9.5% to minus 6.5%.
For the last GDT of this season the index at 1065 was only 2.2% lower than May 16, 2017.
Boniface expects this remarkable stability in prices to continue, enhanced by a lower NZD as the new season rolls on.
The AgriHQ milk price forecast for 2017-18 was unchanged at $6.32, a figure analyst Amy Castleton thought probably underestimated the non-GDT prices obtained by Fonterra and hence Fonterra’s $6.55 prediction.
Her forecast for next season is $6.58 and the spot price (if the whole season’s production was sold at today’s prices and exchange rate) jumped 39c to $7.28.
