The GDT price index rose 3.1%, on top of two consecutive increases of 1.7% and 1.6% in early April and late March respectively.
Therefore the market has recovered all of the most-recent 6.3% fall, on March 7, and the trend suggested buoyant and stable prices for the remainder of the current dairy season.
“The country has been in storm mode for most of the past month, but the saving grace for dairying is that it has come late in the season and the major dairying regions have escaped the worst of the production impacts,” ASB Bank rural economist Nathan Penny said.
After counting the cost for Bay of Plenty farmers, Penny said there was a silver lining to lost dairy production – some upside potential on his current $6/kg farmgate forecast.
“Moreover, the recent auction results reaffirm our $6.75/kg forecast for next season.”
Rabobank dairy analyst Emma Higgins said products made from milk fat such as butter, anhydrous milk fat, and cheese, maintained their high prices.
Milk powders also burst into life – skim milk powder (SMP) was up 7% to climb above US$2000/tonne, and whole milk powder (WMP) went up 3.5% to just under $3000/t.
As the northern hemisphere spring peak approaches (in May), the spread between SMP and WMP prices should persist and SMP will probably go into European Union intervention storage.
“Despite this, market prices generally seem to be steering clear of breaking below the intervention price threshold for now but we shall see if that holds true across the coming weeks,” Higgins said.
She earlier said that the current season would end at about $6/kg milksolids and the new season was likely to bring $6.25.
A milk price of this level next season would allow NZ dairy farmers to emerge from the woods after two years of very low milk prices.
The cashflow benefits from higher prices were only now getting to farmers’ pockets and another profitable season in 2017-18 was essential to rebuild confidence in the sector.
AgriHQ dairy analyst Susan Kilsby said WMP futures prices have made solid gains over the past few weeks and that had been a big factor in the revised farmgate forecast price of $6.18.
“Buyers are showing much more interest in locking in prices as the NZ draws to a close,” she said.
“Farmers have shown considerable interest in using milk price futures to secure some certainty around next season’s milk price.
“The September 2018 milk price contract ‑ for next season's production ‑ has shot up in price over the past fortnight.
“It now trades at $6.20/kg, whereas at the beginning of April this contract was priced at $5.80.”
