As we move into the backend of the milk production season in New Zealand, global dairy markets are braced for the annual surge in European milk production over the coming months. While the market has stabilised somewhat in the last month, dairy commodity prices remain very weak, particularly in the milk powder market.
Any recovery in powder prices is hard to see at present with milk powder futures remaining weak overall. Futures contracts for whole milk powder (WMP) traded on the NZX derivatives market in New Zealand have trended lower in the last week with prices back more than 3%.
WMP futures, which act as a proxy for the performance of the biweekly GDT, have generally been trading steadily since the middle of February but there is little sign of a significant lift in prices.
The next GDT auction will take place next week in New Zealand and, based on how WMP futures are currently performing, it is unlikely that we will see any significant boost in the benchmark dairy index.
Bullish mood at Fonterra
Despite the current weakness in dairy markets, the New Zealand processor Fonterra issued a bullish outlook for the year ahead, projecting a lift in dairy commodity prices by the end of 2016.
The world’s largest dairy exporter said it expects milk output growth in Europe to return to “more normal” growth levels of 1% per annum next year after the surge in milk output following the end of quotas.
Fonterra also remained positive on China projecting the country’s dairy imports to return to growth rates of 4% to 5% per annum this year.
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Dairy trends: Fonterra expects dairy price improvement later in the year
Article 222 and the flawed logic of milk production management
As we move into the backend of the milk production season in New Zealand, global dairy markets are braced for the annual surge in European milk production over the coming months. While the market has stabilised somewhat in the last month, dairy commodity prices remain very weak, particularly in the milk powder market.
Any recovery in powder prices is hard to see at present with milk powder futures remaining weak overall. Futures contracts for whole milk powder (WMP) traded on the NZX derivatives market in New Zealand have trended lower in the last week with prices back more than 3%.
WMP futures, which act as a proxy for the performance of the biweekly GDT, have generally been trading steadily since the middle of February but there is little sign of a significant lift in prices.
The next GDT auction will take place next week in New Zealand and, based on how WMP futures are currently performing, it is unlikely that we will see any significant boost in the benchmark dairy index.
Bullish mood at Fonterra
Despite the current weakness in dairy markets, the New Zealand processor Fonterra issued a bullish outlook for the year ahead, projecting a lift in dairy commodity prices by the end of 2016.
The world’s largest dairy exporter said it expects milk output growth in Europe to return to “more normal” growth levels of 1% per annum next year after the surge in milk output following the end of quotas.
Fonterra also remained positive on China projecting the country’s dairy imports to return to growth rates of 4% to 5% per annum this year.
Read more
Dairy trends: Fonterra expects dairy price improvement later in the year
Article 222 and the flawed logic of milk production management
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