The outcome of last week’s GDT auction event in New Zealand surprised markets. While there was still a drop in the benchmark dairy index, it proved to be less than had been expected. Market analysts and commentators had anticipated a drop in the GDT of around 10% going by market indicators. In the end, the average product selling price fell by less than 3% as volumes traded on the auction platform remained low.
In response to the better than expected GDT result, whole milk powder (WMP) futures jumped strongly during the following day’s trade. March, April and May contracts for WMP offered by the NZX derivatives market, the New Zealand-based futures exchange, have gained more than 13% since this time last week and are now trading in the region of $2,000/t once more.
WMP futures tend to be a decent gauge for the performance of upcoming GDT auctions as WMP is the key commodity traded at the auction format accounting for more than half the product sold.
Despite the better GDT result, a number of New Zealand’s financial institutions are retaining a bearish outlook for the market with some of the country’s largest banks revising their milk price forecasts down further for the current season in the last week.
ASB Bank has cut its milk price forecast to $3.90/kg (15.9c/l), while ANZ Bank has cut its forecast to $3.95/kg (16c/l). Economists at Westpac, New Zealand’s second-largest bank, have trimmed their forecast price to $4/kg (16.3c/l).
Closer to home, new data recently released by Eurostat shows that Dutch milk collections for January 2016 increased by 15.5% to 1.22m tonnes compared with this time last year. Dutch milk collections for January this year were over 98,000t ahead of December 2015, which was previously the highest-producing single month since 1986.
Read more
GDT drops for fourth consecutive auction in a row
Dairy futures market: another drop in GDT index on the cards
The outcome of last week’s GDT auction event in New Zealand surprised markets. While there was still a drop in the benchmark dairy index, it proved to be less than had been expected. Market analysts and commentators had anticipated a drop in the GDT of around 10% going by market indicators. In the end, the average product selling price fell by less than 3% as volumes traded on the auction platform remained low.
In response to the better than expected GDT result, whole milk powder (WMP) futures jumped strongly during the following day’s trade. March, April and May contracts for WMP offered by the NZX derivatives market, the New Zealand-based futures exchange, have gained more than 13% since this time last week and are now trading in the region of $2,000/t once more.
WMP futures tend to be a decent gauge for the performance of upcoming GDT auctions as WMP is the key commodity traded at the auction format accounting for more than half the product sold.
Despite the better GDT result, a number of New Zealand’s financial institutions are retaining a bearish outlook for the market with some of the country’s largest banks revising their milk price forecasts down further for the current season in the last week.
ASB Bank has cut its milk price forecast to $3.90/kg (15.9c/l), while ANZ Bank has cut its forecast to $3.95/kg (16c/l). Economists at Westpac, New Zealand’s second-largest bank, have trimmed their forecast price to $4/kg (16.3c/l).
Closer to home, new data recently released by Eurostat shows that Dutch milk collections for January 2016 increased by 15.5% to 1.22m tonnes compared with this time last year. Dutch milk collections for January this year were over 98,000t ahead of December 2015, which was previously the highest-producing single month since 1986.
Read more
GDT drops for fourth consecutive auction in a row
Dairy futures market: another drop in GDT index on the cards
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