Fonterra yesterday announced it would add an additional 12,140 tonnes to the GDT auction over the next 12 months, with 90 per cent of the increased volume added in the coming three months.
Most of the increase was in whole milk powder, with an additional 6,230 tonnes added over the next three months, it said.
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Fonterra has been increasing volumes on the GDT as increased rainfall in New Zealand lessens the chance of drought and boosts milk production.
It also revised up the amount of skim milk powder, butter and anhydrous milk fat it will offer for auction.
"Fonterra has added additional volume onto the GDT in general, but particularly onto the Contract 2 for whole milk powder," said AgriHQ senior dairy analyst Susan Kilsby.
"The extra volume is likely because they are expecting more milk than they were previously after they changed their milk production forecast."
AgriHQ's Kilsby said prices are likely to remain weak in coming months before picking up again.
"There's not a lot to support the market at the moment as there's still a lot of milk around and there's nothing really supportive for the next month or two," she said.
"So long as extra volume is being added into GDT, that's going to put downwards pressure on prices.
"Over the medium to longer term we are expecting prices to improve again," she said.
"They are essentially at unsustainable levels at the moment so that is slowing global milk production and it's also stimulating demand for product.
"Over the medium to longer term we definitely expect prices to go up but in the next month or two there's nothing really at the moment to support prices."
Many buyers were on the sidelines as they awaited the removal of European milk quotas at the end of this month, to see if increased production could further weaken prices, she said.
The New Zealand dollar this morning touched a four-day low of 75.51 US cents on concern about the outlook for dairy, New Zealand's largest commodity export.
It was recently trading at 75.87 US cents.
Fonterra, in a statement, said improved conditions over the last two months had led it to increase the amount of dairy product it will put up for sale on the platform.
"While Fonterra's GDT offer quantities and forecasts are genuine estimates of product availability at the time of publication they can change as our view of future events or trends in supply and demand factors change," Fonterra said.
Key factors that influence Fonterra's GDT forecasts are seasonal changes or weather events impacting milk supply, production, storage or supply chain constraints, anticipated customer demand from GDT and non-GDT sales channels and differences in relative returns of products.
"A revision to our anticipated milk supply due to improving conditions across New Zealand over the last two months combined with changes in our demand balance has led to a change in the most recent GDT offer quantity forecasts," Fonterra said.
Forecast offer volumes over the next 12 months have been increased by 12,140 tonnes with 10,900 tonnes occurring over the next 3 months and the remainder spread over the following nine months.
Wholemilk powder offered by Fonterra on the GDT auction is the main contributor to the change with a 6,230 tonne increase over the April to June period.
In addition, following its launch of Australian skim milk powder sales in January, Fonterra said it would increase its offering over the next 12 months by 5,785 tonnes.
See recent movements in the Global Dairy Trade auctions here:
- Additional reporting: BusinessDesk
