That was enough to take 10c off the AgriHQ milk price forecast to $6.87, having started the new season close to Fonterra’s own farmgate forecast of $7/kg milksolids.
In the June 5 GDT cheese and butter prices suffered similar decreases, down 3.6% and 3.5% respectively, and anhydrous milk fat lost 1.7%.
On the positive side butter milk powder went up 17.7%, lactose 3.9%, casein 2.7% and skim milk powder 0.3%.
In SMP contract 2 prices for August the Fonterra product averaged US$2139/tonne and the Arla European product $1889.
SMP futures prices generally rose over the three weeks between GDT auctions and the market expected them to stay about $2150 until November then ease slightly through the rest of the season.
ASB senior rural economist Nathan Penny said the global butter shortage probably remains acute and he expects butter and AMF prices to set new records in coming months.
The price softness might have reflected New Zealand’s slightly higher milk production in April, up 3.1% for all processors compared with April 2017 but as April produces only 7% of NZ’s annual milk tonnage, the boost will be temporary.
Fonterra chairman John Wilson said the high prices for butter partly reflect the differing stream returns for both European and NZ processors.
The low SMP prices had made the butter/SMP stream option less attractive than making cheese, which the Europeans had preferred.
Here, WMP was the preferred option.
“Now that SMP prices are rising the balance is shifting back in favour of butter and SMP and we may see higher volumes on offer,” he told the Jersey NZ annual conference.
Fonterra’s milk collection in April was up 2% on 2017 but the co-op is minus 2% for the season-to-date with only May left of the season.
All the reduction occurred in the North Island as collection in the South Island was steady on the comparable 11 months in 2016-17.
Fonterra Australia’s collection was up 26% over the same period.
European production was up 3% in the 12 months to end-March and United States production up 2% to end-February.
