Global dairy prices hold steady

Global dairy prices hold steady, with market up 0.2pc


Global dairy commodity prices held steady at auction on Tuesday night.


Global dairy commodity prices held steady at auction on Tuesday night.

The Global Dairy Trade price index was up 0.2 per cent, led by a big jump in the butter milk powder index, which was up 6.7pc.

Skim milk powder also recorded a healthy increase, up 2.7pc, as did lactose, up 1.8pc.

The key whole milk powder index fell slightly (down 0.2pc), as did the butter index, while the cheddar index recorded the biggest fall, down 3.4pc.

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The results were largely in line with analysts' expectations.

"Global dairy prices remain relatively resilient in the wake of the increasingly shambolic geo-political backdrop and slowing global growth," New Zealand bank ASB senior rural economist Nathan Penny said.

"Key whole milk powder (WMP) prices were in line with our expectations.

"We had expected no change in whole milk powder prices, while futures pricing had pointed to a 1pc lift.

"We also noted ahead of the auction that a weaker Chinese currency since the last auction was likely to hold back WMP prices."

Mr Penny said China was the world's biggest dairy importer and despite recent slowing of the economy there and weakening of its currency due to the US trade war, the household sector and food purchases were holding.

"The relative strength of the Chinese household sector appears one key factor underpinning global dairy prices," he said.

Westpac NZ market strategist Imre Speizer said the latest release from Stats NZ confirmed the rising trend of dairy export volumes from NZ to China since 2016.

China was now importing as much as it did at the previous peak in 2013.

At Tuesday night's auction, Chinese auction demand was sold, worth around 50pc of the total trade, Mr Speizer said.

"The outlook for China's economy is mixed: over the remainder of 2019 we expect the pace of activity to slow further, but over the long term its various stimulatory initiatives should prove supportive," he said.

"Against this backdrop, consumer activity has held up well, China so far successfully engineering a rebalancing of the economy towards domestic consumption."

Both analysts pointed to NZ production as the key for future prices.

Global supply remains tight, particularly in the northern hemisphere and Australia.

But NZ has had a reasonable start to its season with production up about 2pc in August, compared with the same month last year.

The story Global dairy prices hold steady first appeared on Farm Online.


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