Whole milk powder prices take another hit

Mozzarella prices fell on light volumes. Photo / 123RF

Global dairy prices have squeezed out a small gain despite whole milk powder taking another hit.

After a 6.9% drop across the board at the last auction, expectations had been for another fall at the latest Global Dairy Trade (GDT) auction overnight.

It was the largest drop since August last year and the second consecutive auction in which dairy prices had dropped.

However, the GDT price index rose 0.4% to an average price of US$3,837 (NZ$6,344) a metric tonne.

That’s despite a 1.6% drop for whole milk powder (WMP) – which makes up more than half of the auction by volume and has the biggest influence on Fonterra’s farmgate milk price – to US$3,142/MT.

It is now the third consecutive auction WMP prices have dropped, having increased 1.7% at the season’s first auction to US$3,478/MT.

Before the auction, HighGround Dairy’s senior manager of global markets, Stu Davison, said another 3% decline seemed probable.

“Anything less will be impressive.”

ASB senior economist Chris Tennent-Brown also picked WMP prices to ease by about US$100.

Meanwhile, skim milk powder prices, which is the second largest influence on Fonterra’s milk price and makes up about a third of the auction by volume, dropped 1.1% to US$2,566/MT.

Mozzarella decreased 0.8% to $4,225/MT on light volumes.

Lactose also decreased by 0.6% to US$792/MT.

The largest increase was in cheddar, up 6.2% to US$4,217/MT.

Anhydrous milk fat was up 4% to US$6,764/MT, and butter prices also increased 0.8% to $6,606/MT.

Just over 22,954/MT of product was sold across the auction with 174 participating bidders.

Fonterra currently has a forecast farmgate price of between $7.25 and $8.75 a kilogram of milk solids (kgMS), with a midpoint of $8/kgMS for the new season.

Synlait’s forecast base price is also $8/kgMS.

SGX-NZX NZ Milk Price Futures lasted traded at 8.23/kgMS, down from $8.27/kgMS.

-BusinessDesk