No Relief for Global Dairy Prices in Overnight Auction
Category: Dairy
(Wall Street Journal) – International dairy prices slipped in the overnight GlobalDairyTrade auction for June 16, an international trading platform established by New Zealand’s Fonterra Co-Operative Group Ltd.
The GDT Price Index, which covers a variety of products and contract periods in the auction, fell 1.3% from the previous auction on June 2. The average selling price was $2,409 a metric ton.
The average selling price for whole-milk powder was $2,327 a metric ton, down 0.1% from the prior auction.
Economists had anticipated a slight bounce, given that volumes on offer were lower and because whole-milk powder futures on the New Zealand Stock Exchange traded at a slight premium to prices from the prior auction.
New Zealand’s AgriHQ dairy analyst Susan Kilsby said Wednesday that the quantity of whole milk powder on the GDT platform is forecast to rise from July onward as new season product starts to be forward sold.
“It will become harder for prices to recover as the volume of milk powder on offer increases as the new dairy season progresses,” she said.
The dairy industry is the backbone of New Zealand’s economy, accounting for more than a quarter of exports. But the country’s farmers have watched global dairy prices more than halve since early 2014 and many are operating below break-even.
Dairy prices have suffered because of world-wide overproduction, subdued demand from important markets such as China, and a glut sparked by Russia’s ban on U.S. and European food imports. New Zealand’s Fonterra Co-Operative Group Ltd., the world’s largest milk exporter, is reviewing its business and has slashed the forecast payout for its 10,600 farmer shareholders.
The GlobalDairyTrade auction is closely watched, as the GDT Price Index is widely considered a market reference price for dairy products. Products on offer include whole-milk powder, skim-milk powder, butter, cheese and anhydrous milk fat.
