Whole milk powder (WMP) prices lifted 0.4% to US$4,097 a tonne, while the Global Dairy Trade (GDT) price index eased 0.1%. The average price was US$4,110 a tonne and 25,040 tonnes of product was sold.
“Compared to the equivalent event last year, North Asia significantly increased the volume of whole milk powder purchased,” NZX dairy analyst Stu Davison said.
He says North Asia also controlled demand for skim milk powder and purchased the largest quantity of butter.
The lift was below the 2% increase futures markets had predicted.
Davison says it seems the GDT index is now settling into a new price range with this result, with WMP prices supported at this level along with skim milk powder prices (SMP).
ANZ Bank also noted that dairy prices continue to hold at “high levels”.
The lift in WMP was offset for weaker prices for fat-based products after a lift in butter volumes on offer, it said.
Butter prices fell 0.6%, with the final price settling at US$5,736 a tonne. However, “the result keeps butter in the current price range, even with the extra butter on offer at this auction”.
The steady auction will be good news for farmers and should give Fonterra confidence to retain its 2020-21 forecast farmgate milk price range at $7.30-$7.90 per kilogram of milksolids for the season ending May 31.
“Prices are consolidating at very good levels from Fonterra’s perspective and supportive of the payout,” BNZ senior interest rate strategist Nick Smyth said.
BusinessDesk
