The price for New Zealand’s key export whole milk powder (WMP) was US$2905, a fall of 7.3 per cent. Futures markets had suggested WMP might fall by 1 per cent.
AgriHQ said Fonterra’s latest Global Dairy Update appeared to have given the market the jitters, especially for WMP.
It showed its May production was up 6.6 per cent and that it expected to collect 1.3 per cent more milk in the 2018-19 season. There was 20 per cent more WMP sold than at the last auction but buyers were not willing to pay more for it.
All products except butter milk powder and rennet casein fell. Skim milk powder (SMP) was down 4.6 per cent to US$1913, and butter slipped 4 per cent to US$5390.
Anhydrous milkfat (AMF) was down 1.7 per cent, and cheddar prices also fell 4.3 per cent. But buttermilk powder lifted 6.4 per cent, as did rennet casein (3.6 per cent).
Fonterra said production over the past 12 months had been up in many major dairy countries. The European Union and Australia both recorded 3 per cent rises, and the United States 2 per cent. New Zealand on the other hand had flatlined with a zero per cent growth rate.
Meanwhile this week the Global Dairy Trade marked 10 years of auctions with more than US$22 billion cumulative value of dairy products to buyers from over 80 countries.
GDT director Eric Hansen said the auctions re-wrote the rules of engagement for buying and selling dairy commodities.
“In the era before Global Dairy Trade existed, buyers and sellers were struggling to understand what constituted a current market price in the midst of unprecedented volatility. Dairy farmers had limited access to information about what the milk in their vats was worth in international markets.
“By applying advanced auction methods to create a new sales channel for globally-traded commodity dairy products, Global Dairy Trade’s auctions provided assurance to buyers that they were paying a fair market price. Buyers and sellers were able to better manage price risk. And farmers had a regular market-based price signal around which they could plan their farming businesses,” Hansen said.
The platform launched at the height of the global financial crisis and dairy prices initially crashed but eventually recovered.
By: GERARD HUTCHING