ANZ Bank rural economist Con Williams said the market was struggling to digest more product at the start of the 2015/6 season. Photo / NZME.
NZX dairy futures pricing continues to point to more weakness in the whole milk powder market, following on from the sharp decline at last week's GlobalDairyTrade auction.
Last week, the GDT price index dropped by 5.9 per cent while whole milk powder prices - responsible for about 75 per cent
of Fonterra's farmgate milk price - fell by 10.8 per cent to US$2054 ($3074) a tonne.
On Friday, the July NZX futures contract traded at US$1950 - a US$50 discount to Contract 2 (C2) for September 15 shipment at last week's GDT auction. The August futures contract was down US$45 to US$1930, a US$50 discount to the price paid for Contract 3 (October 15 shipment) at last week's GDT auction.
Nigel Brunel, director of financial markets at OM Financial, said futures selling had seen the premium of futures pricing over GDT market prices melt away. "There is a great weight of selling," Brunel said.
"It's hard to be bullish or upbeat at all," he said, adding a Fonterra farmgate milk price of sub $4 a kg looked likely if weakness in the futures market persisted. Its current forecast is for $5.25 per kg for 2015/6.
