Skim milk powder prices fell 0.8% but Fonterra’s prices between US$2500 and $2800/tonne were at least $400 better than those obtained by European company Arla.
SMP prices have fallen about $500 a tonne across the board since January and are now similar to the first half of 2019.
ASB senior rural economist Nathan Penny said the GDT lift was against the run of play and might not mean much to the downward trend in farmgate milk prices.
“The lift was most likely due to the seasonal decline in volumes on top of the recent drought rather than any potential stabilisation of global dairy demand.”
The volume offered and sold in the latest auction was down 16% on the previous auction, he said.
Westpac analyst Michael Gordon said the latest GDT results are surprisingly positive against the backdrop of a severely weakened global economy.
But they are in keeping with the calmer tone in world financial markets since the previous GDT auction on March 18.
“While the recent stability in prices is encouraging we still think that the dairy sector still has a long, hard road ahead of it.
“We expect further price declines over the next few months.”
Rabobank senior dairy economist Michael Harvey, based in Melbourne, said the lift in GDT index is welcome and will shore up farmgate milk prices in New Zealand and Australia this season.
Looking into next season the imbalances between supply and demand in Europe and the United States will spill over into world prices, which he expects to drift lower over the next three months.
NZX dairy analyst Amy Castleton said her current season milk price forecast is $7.06/kg milksolids, up eight cents, after the latest GDT and subsequent movements on the dairy derivatives market.
Before the GDT event the futures market expected a fall of 3% in WMP prices and afterwards that sentiment turned to a small rise over the rest of this year.
SMP prices are now expected to fall further into the $2400 range by June and then stay there.
NZX milk price futures are now $7.22 for the September 2020 contract, $6.43 for the 2021 contract and $6.30 in very early trading on the 2022 contract.
