The dairy industry is holding up despite the impact of Covid-19. Photo / File.
Dairy product prices rose, advancing for the first time since January and bolstering optimism about the outlook for demand as the world continues to grapple with covid-19.
The GDT price index rose 1.2 per cent from the previous auction three weeks ago. The average price was US$2,969 a tonne, compared with US$2,980 a tonne three weeks ago. Some 20,302 tonnes of product was sold, down from 24,209 tonnes three weeks ago.
"This is the first lift after four consecutive falls, and a better result than had been expected," NZX senior dairy analyst Amy Castleton said in a note. "Market sentiment has still been relatively negative in terms of prices, and the NZX Dairy Derivatives market had been indicating falls across all four main commodities."
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Bank of New Zealand market strategist Jason Wong agreed. "This was a much stronger auction than expected, with our resident cow whisperer Doug Steel looking for a 4 per cent fall in the price index," Wong said in a note. "He's been locked up at home for the past couple of weeks and his gumboots are squeaky clean, so we'll cut him some slack this time."
"The bounce in prices shows there is still some good demand for dairy commodities in the current environment," Castleton said. "As we are coming to the end of New Zealand's dairy season, product availability is limited. The lift in prices shows demand is generally higher than the volume of product available."
Whole milk powder climbed 2.1 per cent to US$2,820 a tonne. Regular grade whole milk powder to ship in June was up 1.9 per cent, according to Castleton.
"North Asia bought more product at this event than they did at the last event, as did South East Asia and Oceania," Castleton said. "There was a fall in the volume bought by Africa and the Middle East—however the fall in the oil price will be having an effect on affordability of dairy product for these regions."
In the latest auction, butter rallied 4.5 per cent to US$4,263 a tonne, while lactose climbed 4.4 per cent to US$959 a tonne.
Anhydrous milk fat rose 0.4 per cent to US$4,345 a tonne.
Regular grade anhydrous milk fat to ship in June lifted 3 per cent, said Castleton.
"Anhydrous milk fat prices did see a fall for product shipping in May, indicating there isn't an immediate need for product but there is demand further out," Castleton said.
"Fonterra had added extra volume of anhydrous milk fat to the GDT platform ahead of the event. The price lift in spite of the extra volume shows there is a need for product above what is actually available."
"Nearly all of the anhydrous milk fat volume was sold," according to Castleton.
Cheddar eked out a 0.2 per cent increase to US$4,395 a tonne.
Meanwhile, skim milk powder slipped 0.8 per cent to US$2,514 a tonne.
Even so, medium heat skim milk powder to ship in June was up 1.6 per cent, said Castleton.
"Skim milk powder prices were down across most contract periods on average," Castleton noted. "There was significantly less volume of skim milk powder bought by all regions compared to the March 17 event. However, most regions bought more skim milk powder than they bought at the equivalent event last year."
Rennet casein dropped 2.6 per cent to US$9,717 a tonne, while butter milk powder plunged 11.9 per cent to US$2,446 a tonne.
For sweet whey powder, no product was offered or sold, or no price was published for the last event, or on both of the two previous events.
The New Zealand dollar was at 59.85 US cents at 7:30 am in Wellington compared with 59.82 US cents at 5pm yesterday.
There were 107 winning bidders out of 160 participating at the 20-round auction. The number of registered bidders was 529, up from 524 at the previous auction.
- BusinessDesk