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Thursday 21 September 2017

Dramatic fall forecast for Global Dairy Trade as futures market slips

Stock photo: Depositphotos
Stock photo: Depositphotos
Ciaran Moran

Ciaran Moran

Analysts are forecasting a fall of as high as 7pc in prices at this week’s Global Dairy Trade (GDT) on the back of weak dairy futures trading.

Whole Milk Powder and Skimmed Milk Powder prices on New Zealand’s NZX futures market fell over 5pc and 10pc respectively for March compared to the last GDT auction.

Much of the recent negative sentiment can be attributed to announcement by Kiwi dairy giant Fonterra that it will be increasing the volumes on product it trades on the GDT.

Fonterra said this is in response to increased milk production in New Zealand due to more favourable weather conditions in recent weeks.

With recent rain in most parts of the country and autumn around the corner, analysts have predicted that the improvements in production are likely to be maintained over the remainder of the season.

GDT dairy prices fell significantly last month, WMP and SMP led prices lower, dipping 3.7pc and 3.8pc, respectively. Overall, auction prices fell 3.2pc.

Looking at 2017 to date, WMP prices have now slid 10pc, while overall prices have drifted 5pc lower.

Meanwhile, nearer to home, the European Commission is understood to have again rejected all tenders for its latest offer Skimmed Milk Powder in intervention.

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According to market sources, the Commission deemed the highest bid of €1803.90/t to be below market price.

It is understood tenders were only received from France and Poland and the tenders were for small quantities (1,400t). This constitutes the fourth consecutive tendering process where the Commission rejected all bids for the stock.

And the Commission is expected to stick to its guns in the short term at least and not sell to offers it says are below market price.

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