NZ: Global Dairy Trade auction down 3.9% - Westpac

Shyamal Maharaj, Research Analyst at Westpac, suggests that they maintain their farmgate milk price forecast of $6.20/KgMs given the latest decline in the final GlobalDairyTrade auction for 2017.

Key Quotes

“Overnight the final GlobalDairyTrade auction for 2017 saw a 3.9% decline in the overall dairy price index.”

“Whole milk powder prices fell 2.5% in stark contrast with dairy futures pricing, which suggested an increase of over 5% on the back of a softer outlook for this season’s forecast milk collections.”

“We have noted that over the past few months, demand has been showing signs of easing, despite concerns of lower production coming out of New Zealand.”

“Putting this together, we maintain our farmgate milk price forecast of $6.20/KgMs compared to Fonterra’s farmgate milk price forecast of $6.40/KgMs for the 2017/18 season.”