The dairy industry's golden run in 2021 has continued with the seventh positive Global Dairy Trade (GDT) auction in a row.
Overnight prices rose 3.0 per cent across the board, led by Whole Milk Powder - which has the biggest impact on Fonterra's Farmgate milk price - with a 4.3 per cent jump to an average US$3,615/MT.
Amidst a week of uncertainty, the result will be a welcome one for dairy farmers, particularly given it is the first GDT since February 3 when Fonterra increased the midpoint of its forecast farmgate milk price for the 2020/21 season by 20 cents to $7.20, and lifted the bottom end of its range to between $6.90 and $7.50.
All other products on offer all experienced modest price increases, with Skim Milk Powder - Fonterra's second biggest "reference" product - up 0.3 per cent to an average US$3,207/MT.
Cheddar rose 2.4 per cent to an average US$2,468/MT, while Butter, which broke the US$5k mark last auction, rose a further 2.0 per cent to an average US$5,129/MT.
Anhydrous Milk Fat had a 1.1 per cent rise to an average US$5,527/MT, and lactose followed suit with a 0.4 per cent rise to an average US$1,232/MT.
Product volumes fell slightly on the previous auctions, as can be expected as New Zealand's dairy herd's collective lactation curve falls, with 26,883MT of product sold, attracting 102 winning bidders.
Fonterra chief executive Miles Hurrell said it was not only a "great result," but also "a little bit ahead of expectation."
"The great start to the 2021 season continues," Hurrell told The Country's Jamie Mackay.
Hurrell put the co-op's success down to its farmers.
"I think our farmers have got a lot to thank themselves for here. The premiums that we're getting on GDT over our competition in Europe and North America are really starting to shine."
There was more buying out of Africa which hadn't been seen for quite some time. This gave Fonterra more confidence, Hurrell said.
"It's not just the China story as it's been for the last few events, so we should take that as a real positive I think."
Listen to Jamie Mackay interview Miles Hurrell on The Country below:
Seasonal volumes were "flat" compared to this time last year, due to favourable growing conditions, Hurrell said.
"This time of year last year we really started to see milk take a dive on the back of that dry in the far north and in the Waikato in particular, so on the basis of pretty good growing conditions we've recouped that position and all indications are that we'll see good milk growth right through the end of the season I think."
Earlier this month Fonterra lifted its 2020/21 forecast farmgate milk price range up by 20c a kg to $6.90 to $7.50 per kg.
The midpoint of the range, which farmers are paid, increased to $7.20 per kg from $7.00
Hurrell said it was too early to up the price even further.
"We only came out last week with that increase, so we sit quite comfortably in that range – I don't see any significant change at the moment."
Also in today's interview: Hurrell talked about how alert levels were affecting Fonterra in the Greater Auckland area.