3.6% dairy price fall largest since March

Dairy prices fell 3.6% in this week’s GlobalDairyTrade event — the sixth consecutive auction in which prices have fallen and the largest fall since March.

Whole milk powder prices fell 3%, while there were also price declines for cheddar (down 9.2%), skim milk powder (down 7%), butter (down 3.2%) and anhydrous milk fat (down 0.9%).

The result was slightly weaker than expected, the futures market having predicted a roughly 2.5% fall in the whole milk powder price.

At $US3864 ($NZ5506) per metric tonne the whole milk powder price was still 20% higher than at the corresponding time last year, Westpac industry economist Paul Clark said in the bank’s latest Dairy Update.

The bank’s forecasts assumed prices would weaken from early highs and it continued to expect a healthy farm-gate milk price of $8 per kg of milk solids for the 2021-22 season, he said.

ASB economist Nathaniel Keall said the moves pointed to some downside risk to ASB’s $8.20 forecast. Prices were moving ‘‘a shade faster’’ than the bank had previously expected, and the fact the fall came despite the fall in volumes offered was a bearish sign.

‘‘The contract curve also now has a sizeable downward slope, showing prices falling substantially for later-dated contracts.

‘‘This suggests prices have lost a bit of momentum as we head deeper into the new season,’’ Mr Keall said.

Aggressive Chinese purchases had fuelled the boom in dairy prices this year as China sought to build its strategic stockpile in response to booming domestic consumption, while tighter global supply and widespread freight disruption had ‘‘added fuel to the fire’’.

But there were now signs Chinese inventory was getting closer to healthy levels and global production, both in New Zealand and the northern hemisphere, had lifted in response to the price signals.

The bank expected prices to drift lower over the remainder of the season, but the pace and size of the easing was a ‘‘big question’’, Mr Keall said.


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that's good news for the cheese consumers of NZ, the price of cheese will be going down by 3.6%. Yeah Right!

A bit rash putting the cheese price up and given the bank expected prices to drift lower over the remainder of the season. Perhaps it is an internal buffer against these international declines.

Will the price of milk and cheese drop for the common man........ crickets......

So Fonterra.....How soon until you announce a reduction in price of milk and cheese for Kiwi consumers?
Now remember.... it's not like petroleum that is sourced from overseas. It's made here in New Zealand. So you can't pretend it will 'take time' for the price reduction to filter through.

Remember that at Mainland good things take time.
The cheese we're buying today was made from milk that was produced, oh, I don't know, 50 years ago, if you believe the adverts. Remember also, their staff make a batch of cheese than go and sit out in the sun on a bench under a spreading oak tree while they wait for it to mature. They've still got to be paid for all that waiting time even though they're producing nothing.
So the moral of the story is don't expect anything speedy from the most inefficient cheese making company in the world.

Funnily enough, I used to work for Mainland Products in Macandrew Road......Then they made us all redundant and gave the our jobs to cheese processing/packing machines in Eltham.

So I guess R2D2 and C3PO are sitting out in the South Taranaki sun instead of Roy Wesney (the Mainland Cheese guy in the tv adverts)

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