The price of whole milk powder, New Zealand's key commodity export, is likely to decline on the GlobalDairyTrade platform overnight, although some analysts say there's no downward trend.
Whole milk powder futures for February last traded at US$3,210 a tonne on the NZX, implying prices will slip 1.4 per cent at tonight's auction.
The February whole milk powder contract on the NZX futures market last traded at US$3,210 a tonne, down from US$3,255 a tonne in the equivalent contract at the last GDT. The March futures contract traded at US$3,235 a tonne, lower than US$3,270 on the GDT; the April contract traded at US$3,250 a tonne from US$3,255 on GDT; the May contract was at US$3,270 a tonne from US$3,290 on GDT, and the June contract was at $US$3,300, from US$3,325.
The current correction is more of a consolidation of the market than a downward trend, according to AgriHQ senior dairy analyst Susan Kilsby.
"The market has eased back a little with milk production data from NZ and Australia showing some improvements lately (ie smaller drops than earlier in the season)," Kilsby said. "Also our exporters are facing more aggressive competition in some markets which is putting downward pressure on prices. But that said we don't expect prices to fall a lot before the end of this season."
Prices for whole milk powder picked up in the second half of 2016 following a prolonged slump, as demand and supply moved back into balance, with the average price for whole milk powder rising almost two-thirds by December from July. However, average dairy prices dropped almost 4 per cent in the first Global Dairy Trade auction for the year amidst increased volumes on offer, with a slight recovery at the last auction on January 18.