Global dairy prices bounce back

Global dairy prices bounce back

ADF News

Global dairy prices bounced back on Tuesday night, recording a 3.6 per cent rise.


Global dairy prices bounced back on Tuesday night, recording a 3.6 per cent rise.

Most commodity prices were up on the Global Dairy Trade auction with skim milk powder leading the way with an 8.4pc rise.

Whole milk powder was up 3.2pc, cheddar was up 7.2pc and anhydrous milk fat was up 2pc.

Only butter (down 1.4pc) and lactose (down 2.7pc) recorded falls.

The bounce followed four negative auction results, but pundits warn there is still considerable uncertainty surrounding global markets.

Westpac senior agri-economist Nathan Penny said although the rise reversed the trend of recent auctions, WMP prices were 8.5pc below and overall prices 4pc below the July peak.

Prices are also down on pre-COVID-19 levels - WMP down 6.8pc and overall down 10.4pc.

Mr Penny said the auction again reflected the improving position of protein prices compared with milk fat.

"The overnight lift was the fourth consecutive SMP price gain," he said.

"Indeed, SMP prices now sit just 6pc below pre-COVID levels, while milk fat (butter and anhydrous milk fat) prices remain around 20pc below."

Mr Penny said prices fluctuations would continue as the COVID-19 crisis continued to play out.

"COVID outbreaks over August and early September put pressure on market confidence and in turn on prices," he said.

"But as COVID numbers settle again, confidence has returned to dairy markets, and prices have stabilised once again.

"From here, we expect this pattern to continue."

Most key dairy markets, particularly China, were handling COVID-19 well but any virus surges in key market would hit prices.

New Zealand bank ASB senior economist Chris Tennent-Brown said the price lift was encouraging.

The price slide in the previous three auction had put pressure on 2020-21 price forecasts for NZ farmers.

He did note that volumes sold on the last three auctions were 10pc down on the same time last year.

"However, with good spring weather and data showing production is up on last year, we don't think buyers will be too worried about availability of product from New Zealand over the coming months," he said.

"With that in mind, the WMP prices achieved overnight are encouraging."

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