(Agrimoney) – Skimmed milk powder values tumbled to their lowest since 2009 as GlobalDairyTrade prices fell for a third successive auction, wiping out gains from an early-year rally on fears over New Zealand drought.
The GlobalDairyTrade index, covering all products sold at the auction, from butter to whole milk powder, fell by 3.6% at the latest event – extending to 22% its retreat from an early-March high.
The sharpest fall was seen in skimmed milk powder, which dropped by 7.8% from the previous auction to an average of $2,253 a tonne – the lowest level since September 2009.
The skimmed milk powder drop reflected a particularly strong decline in short-term contracts, with lots for delivery up to August falling by 10% or more.
More distant contracts, for delivery from September, actually rose, extending their premiums to the near-term contracts to more than $200 a tonne.
The shifting of a commodity price curve to this shape often reflects a situation of strong supplies, with the lower near-term prices encouraging immediate demand while paying suppliers to store product for later delivery.
‘Right back down again’
Indeed, the weaker performance appears down “ultimately to the global milk supply”, a broker told Agrimoney.com, underlining how fears spurred by an early-2015 drought in New Zealand, the top producer, had eased.
“We traded higher for a period of time over concern on the New Zealand weather, and now we’re trading back right back down again.”
Indeed, the GlobalDairyTrade index fell to exactly where it started the year – having shown a 27% gain as of early March.
Signally, the amount of dairy product sold at the latest auction, at 25,596 tonnes, was up 10.5% on the volume at the previous event.
Buoyant exports
The drop in skim milk powder prices tallies with a drop in Chicago non-fat dairy milk futures last week to their lowest since August 2009.
That supplies of the powder have been particularly plentiful has shown up in export data, with New Zealand shipments up 25% in January, and Australian shipments rising too, in contrast in both cases to drops in whole milk powder volumes.
European Union skim milk powder exports soared 59% last year.
