Another strong rise in global dairy prices will spur interest in the listed dairy companies as it points to ongoing demand, in particular from China.
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The ongoing lift in dairy prices could spur Fonterra to lift its forecast payout to dairy farmers, which will also give the economy a further lift.

Global dairy prices lifted 4.8%, with whole milk powder (WMP) up 2.2% to US$3,380 a tonne.

NZX senior dairy analyst Amy Castleton says the result was in line with the NZX derivatives market indications prior to the whole milk price auction.

“If the NZX Dairy Derivatives market keeps getting it right there are more price gains to be had for WMP going forward. Demand for dairy products continues to stay strong, with no slowdown in sight,” Castleton said.

Demand for WMP was again led by North Asia, with significant increases in the amount bought at this auction compared to the last auction, and compared to the equivalent event in 2020.

The ongoing lift in dairy prices could spur Fonterra to lift its forecast payout to dairy farmers, which will also give the economy a further lift.

Dairy companies a2 Milk, Synlait Milk and units in the Fonterra Shareholders’ Fund will also be helped by the weaker Kiwi dollar as it makes exports more competitive in global markets.

ANZ Bank, however, does not expect it to last.

“The US dollar eased back from its corrective highs as the focus returned to the expansionary policies of the incoming Biden administration. A period of consolidation is now possible,” it said.

The NZ dollar was trading at 71.10 US cents at 8am in Wellington from 71.33 cents at 5pm yesterday.

–BusinessDesk

The giant Holstein cow with spots arranged as a map of the world is designed to celebrate the farmer-owned cooperative’s diversity, equity, and inclusion efforts.

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