Listen: GDT analysis with Rabobank's Emma Higgins

Rabobank Dairy Analyst Emma Higgins. Photo / Supplied

Rabobank Dairy Analyst Emma Higgins spoke to The Country today about the latest Global Dairy Trade Event.

Weaker prices were evident in the GDT Event held overnight, with the average price index price dropping -1.6% to land at USD 3,343/tonne.

This time around, the dairy fats led the slump in prices. AMF price dropped by almost 5% to USD 6,289/tonne which is a third decline in a row for the GDT Event.

Butter prices receded also by almost 5% from previous highs ($6k/tonne) to sit at $5,747/tonne.

Higgins says this result doesn't change the fact that fats are still the 'in' thing. However, this latest GDT result highlights the risk that to protect margins some end users will try to substitute dairy fats (particularly AMF) for other cheaper fats such as vegetable oils.

The average WMP price lifted by 1.3% to USD 3,155/tonne and results for shipments further out in the year were in positive territory.

This is something Higgins expects to continue as the seasonal Chinese buying begins for delivery of product in early 2018 to obtain a lower tariff rate.

On the flipside SMP was down 3%, bringing the average price below the $2k mark again (USD 1,966 /tonne).

While this is in line with Rabobank's forecasts, it highlights the challenges for this product category which was further enhanced with NZ product trading at a discount to European skim.

Listen to the full interview in the Soundcloud embed below: