Dairy product prices posted the biggest gain in five months
in this week's GlobalDairyTrade auction as international
dairy prices remain very high.
After a trend towards lower prices at the previous few
auctions, the headline price index increased 3.9% while
prices were higher across almost all products on offer.
Rennet casein lifted 18.9%, lactose was up 6.1%, milk protein
concentrate up 5.9%, skim milk powder up 5.6%, butter milk
powder up 4.6% and butter up 4.5%.
The apparent strength in demand given such high prices and
strong production growth in New Zealand was impressive,
Westpac senior economist Anne Boniface said.
Westpac had nudged up its forecast of the 2013-14 milk price
from $8.30 to $8.40kg ms, while an update on Fonterra's own
forecast (currently at $8.30) was expected next week.
Westpac's forecast for 2014 and beyond relied on dairy prices
falling next year, due to the expectation that global supply
would increase in response to the exceptionally high prices
The New Zealand dairy season had started strongly, with
nationwide production up 7.2% in the four months to
September. Growth had been led by the increased production in
the South Island.
However, over the back end of the season, that was expected
to switch as North Island areas hit particularly hard by last
summer's drought outperformed relative to last year.
Even if production dropped back to 2012 levels over the
second half of the season, production would still be on
course to be up more than 8%, Ms Boniface said.
Australian dairy farmers had not had such a strong start to
the season, with production down 4% over the four months to
European dairy production had risen sharply over the past few
months, although volumes were near seasonal lows, while US
production had been consistently running ahead of last year's
levels in recent months.
The ANZ commodity price index eased 0.4% in November, the
first decline in five months, although it was relatively
The price of aluminium recorded the largest fall, dropping 4%
to a four-year low. Whole milk powder prices eased 3%, the
international price of butter declined 2% and casein eased
0.5%, while skim milk powder prices lifted 3% and cheese
Meanwhile, resource consent applications have been lodged for
a new large-scale infant formula spray drying plant at
Synlait Milk's Dunsandel site in Mid-Canterbury.
The plant is part of the company's growth initiatives which
will add lactoferrin production, blending and packaging of
infant formula products and a 40% increase in production
The lactoferrin plant, which is under construction, is on
target with production expected to begin in February.
A 22,500sq m capacity drystore is under construction and
expected to be commissioned at the end of March, and a
blending and canning facility is expected to be commissioned
ahead of schedule in June.