Dairy prices edged up in the overnight global auction as weaker demand from North Asia was offset by higher demand from other regions.
The global dairy trade price index gained 0.3 per cent from the previous auction a fortnight ago. The price of whole milk powder, which has the most impact on what farmers are paid, was unchanged at an average US$4085 a tonne.
Whole milk powder prices jumped 21 per cent at the first auction in March amid a surge in demand from China driven by a desire for better nutrition from a wealthier population and increased health awareness after Covid-19. Prices pulled back 6.2 per cent at the following auction and demand from North Asia was weaker at the latest event.
“This event highlights that North Asia is not the only region wanting dairy, with South East Asia/Oceania keenly taking up any spare volume available,” said NZX analyst Stuart Davison. “North Asian buyers’ demands are now being met with the current volume of whole milk powder being offered.”
The trend was evident across all commodities, with less volume destined for North Asian ports compared to the previous event, Davison said.
Other regions, including South and Central America, South East Asia and Oceania, and the Middle East and Africa had increased the amount they purchased, he said.
Skim milk powder prices gained 0.6 per cent to an average US$3367 a tonne. Fonterra Cooperative Group achieved a premium for its product above US$3330 a tonne, compared with prices for the European Union product at US$3149 a tonne, and United States product at US$3085, Davison said.
Fonterra expects to pay its 10,000 farmers between $7.30 and $7.90 per kilogram of milk solids this season, which it says would contribute about $11.5 billion to the economy.
Dairy products are the country’s largest commodity export.