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Home / The Country

Dairy prices stage biggest jump since 2016 at GDT auction

Jamie Gray
By Jamie Gray
Business Reporter·NZ Herald·
7 Jul, 2020 06:40 PM2 mins to read

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Fonterra has set a wide range for the 2020/21 season. Photo / File

Fonterra has set a wide range for the 2020/21 season. Photo / File

Strong demand for New Zealand's single biggest export - whole milk powder (WMP) - drove prices sharply higher at this morning's Global Dairy Trade auction.

The GDT price index jumped by 8.3 per cent - its biggest lift since November 2016 and the fourth consecutive gain at the twice-monthly auction.

WMP prices - which have the biggest bearing on Fonterra's farmgate milk price - leapt by 14 per cent to US$3208 a tonne and back to where they were in late January of this year.

Prices for WMP were up for all the contract periods, though the lifts were strongest for nearer dated contracts indicating strong short term demand, NZX dairy analyst Amy Castleton said in a commentary.

READ MORE:
• What farmers can expect from Fonterra's Q3 update
• Fonterra forecast: Co-op to contribute $11 billion to NZ economy over next year
• Fonterra appears to have seen the error of its ways on bill paying
• GDT result 'exceeded expectations' - Fonterra

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Regular grade WMP to ship in September jumped by 16.3 per cent.

The NZX Dairy Derivatives market had indicated an increase in this grade and contract of WMP ahead of the event, but the lift was much greater than was anticipated, she said.

"There has been good demand for WMP recently, and there is still limited availability from New Zealand at this time of year with our season yet to get into full swing," she said.

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"It's likely that buyers have been trying to get in while prices are relatively low, and while product is available, with milk production for the season ahead uncertain," she said.

Skim milk powder, which also has a strong bearing on the milk price, rose by 3.5 per cent to US$2694 a tonne.

Among the other Fonterra reference products, butter rose by 3 per cent to US$3717 a tonne, butter milk powder by 3.8 per cent to US$2417 a tonne, and cheddar by 3.3 per cent a tonne to US$3762 a tonne.

Anhydrous milk fat prices fell by 0.2 per cent to US$3981/tonne.

Discover more

The Country - Big GDT edition

08 Jul 01:00 AM
Business

Dairy prices hold up at latest GDT auction

21 Jul 08:46 PM

The 2020/21 season started on June 1, and volume is typically low at this time of year.
Production usually peaks over October and November.

Fonterra has set a wide $5.40 to $6.90 per kg milk price for 2020/21.

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