COVID Delta uncertainty hits global dairy prices

Global Dairy Trade index falls 2.9% on July 20 on back of Delta surge

Dairy
Aa

Global dairy prices fell at auction on Tuesday night on the back of increasing economic uncertainty created by growing COVID-19 cases worldwide.

Aa

Global dairy prices fell at auction on Tuesday night on the back of increasing economic uncertainty created by growing COVID-19 cases worldwide.

The Global Dairy Trade price index was down 2.9 per cent, the seventh consecutive fall.

Analysts pointed to heightened market concerns around the COVID-19 Delta variant and the global resurgence in cases as a key factor in the fall.

The key commodities - whole milk powder and skim milk powder - took big hits, down 3.8pc and 5.2pc respectively.

Cheddar was the only commodity to buck the trend - up 1.3pc.

Related reading: Rural Bank sees dairy industry resurgence

Westpac senior agri economist Nathan Penny said the price fall and increasing COVID-19 uncertainty had put downside risks on the bank's New Zealand farmgate milk price forecast.

"COVID is not going quietly," he said.

"The Delta variant has thrown a spanner in the works and financial and commodity markets have hit pause on the earlier optimism around vaccine rollouts and subsequent economic recovery.

"Indeed, the earlier exuberance in sharemarkets and key commodity markets has decidedly cooled this week."

Related reading: Milk prices now in a 'super cycle', says ADPF head

NZ bank ASB economist Nathaniel Keall said the surge in Delta cases overseas had added a bit of uncertainty into the economic outlook.

"But we still expect the uptick in global demand and ongoing supply chain issues will keep commodity prices supported across the board," he said.

Mr Penny said it would take some time to digest what the changing COVID-19 situation would mean for dairy markets.

"As a result, we'll be keeping a close eye on COVID and dairy demand developments over the coming weeks, with a particular focus on key dairy markets in Asia," he said.

Want to read more stories like this?

Sign up below to receive our e-newsletter delivered fresh to your email in-box twice a week.


Aa

From the front page

Sponsored by